Correlation Between Marlowe Plc and AmTrust Financial

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

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

Diversification Opportunities for Marlowe Plc and AmTrust Financial

-0.31

Correlation Coefficient

Marlowe Plc  AmTrust Financial

Very good diversification

The 3 months correlation between Marlowe and AmTrust is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Marlowe plc and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Marlowe Plc 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 Marlowe plc 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 Marlowe Plc i.e., Marlowe Plc and AmTrust Financial go up and down completely randomly.

Pair Corralation between Marlowe Plc and AmTrust Financial

Assuming the 90 days horizon Marlowe plc is expected to generate 2.14 times more return on investment than AmTrust Financial. However, Marlowe Plc is 2.14 times more volatile than AmTrust Financial Services. It trades about 0.02 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  523.00  in Marlowe plc on October 21, 2024 and sell it today you would lose (137.00) from holding Marlowe plc or give up 26.2% of portfolio value over 90 days.

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

Marlowe plc  vs.  AmTrust Financial Services

Marlowe plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marlowe plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AmTrust Financial

Risk-Adjusted Performance

3 of 100

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 Marlowe Plc and AmTrust Financial

The main advantage of trading using opposite Marlowe Plc and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marlowe Plc 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 Marlowe plc 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 Global Correlations module to find global opportunities by holding instruments from different markets.