Correlation Between AMERISAFE and Tiptree

Can any of the company-specific risk be diversified away by investing in both AMERISAFE and Tiptree at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AMERISAFE and Tiptree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMERISAFE and Tiptree, you can compare the effects of market volatilities on AMERISAFE and Tiptree and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AMERISAFE with a short position of Tiptree. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERISAFE and Tiptree.

Diversification Opportunities for AMERISAFE and Tiptree

0.89

Correlation Coefficient

AMERISAFE  Tiptree

Very poor diversification

The 3 months correlation between AMERISAFE and Tiptree is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree and AMERISAFE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AMERISAFE are associated (or correlated) with Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of AMERISAFE i.e., AMERISAFE and Tiptree go up and down completely randomly.

Pair Corralation between AMERISAFE and Tiptree

Given the investment horizon of 90 days AMERISAFE is expected to generate 1.08 times less return on investment than Tiptree. In addition to that, AMERISAFE is 1.17 times more volatile than Tiptree. It trades about 0.09 of its total potential returns per unit of risk. Tiptree is currently generating about 0.12 per unit of volatility. If you would invest  1,896  in Tiptree on September 12, 2024 and sell it today you would earn a total of  254.50  from holding Tiptree or generate 13.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

AMERISAFE  vs.  Tiptree

AMERISAFE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMERISAFE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, AMERISAFE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tiptree

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiptree are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tiptree unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMERISAFE and Tiptree

The main advantage of trading using opposite AMERISAFE and Tiptree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERISAFE position performs unexpectedly, Tiptree can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tiptree will offset losses from the drop in Tiptree's long position.

The idea behind AMERISAFE and Tiptree pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.