Correlation Between Broadstone Net and AmTrust Financial

Can any of the company-specific risk be diversified away by investing in both Broadstone Net and AmTrust Financial 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 Broadstone Net and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadstone Net Lease and AmTrust Financial Services, you can compare the effects of market volatilities on Broadstone Net and AmTrust Financial 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 Broadstone Net with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and AmTrust Financial.

Diversification Opportunities for Broadstone Net and AmTrust Financial

0.62

Correlation Coefficient

Broadstone Net  AmTrust Financial

Poor diversification

The 3 months correlation between Broadstone and AmTrust is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Broadstone Net i.e., Broadstone Net and AmTrust Financial go up and down completely randomly.

Pair Corralation between Broadstone Net and AmTrust Financial

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.7 times more return on investment than AmTrust Financial. However, Broadstone Net Lease is 1.42 times less risky than AmTrust Financial. It trades about 0.11 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.04 per unit of risk. If you would invest  1,565  in Broadstone Net Lease on December 27, 2024 and sell it today you would earn a total of  140.00  from holding Broadstone Net Lease or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Broadstone Net Lease  vs.  AmTrust Financial Services

Broadstone Net Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net Lease are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Broadstone Net may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AmTrust Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, AmTrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Broadstone Net and AmTrust Financial

The main advantage of trading using opposite Broadstone Net and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial's long position.

The idea behind Broadstone Net Lease and AmTrust Financial Services 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..