Correlation Between 3M and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both 3M 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 3M and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and AmTrust Financial Services, you can compare the effects of market volatilities on 3M 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 3M with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and AmTrust Financial.
Diversification Opportunities for 3M and AmTrust Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 3M and AmTrust is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and 3M 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 3M Company 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 3M i.e., 3M and AmTrust Financial go up and down completely randomly.
Pair Corralation between 3M and AmTrust Financial
Considering the 90-day investment horizon 3M Company is expected to generate 0.61 times more return on investment than AmTrust Financial. However, 3M Company is 1.64 times less risky than AmTrust Financial. It trades about 0.15 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.03 per unit of risk. If you would invest 12,954 in 3M Company on December 27, 2024 and sell it today you would earn a total of 1,890 from holding 3M Company or generate 14.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
3M Company vs. AmTrust Financial Services
Performance |
Timeline |
3M Company |
AmTrust Financial |
3M and AmTrust Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3M and AmTrust Financial
The main advantage of trading using opposite 3M and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M 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.3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. Aspen Insurance Holdings |
Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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