Correlation Between HUMANA and AmTrust Financial

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

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

Diversification Opportunities for HUMANA and AmTrust Financial

0.0

Correlation Coefficient

HUMANA  AmTrust Financial

Pay attention - limited upside

The 3 months correlation between HUMANA and AmTrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and HUMANA 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 HUMANA INC 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 HUMANA i.e., HUMANA and AmTrust Financial go up and down completely randomly.

Pair Corralation between HUMANA and AmTrust Financial

Assuming the 90 days trading horizon HUMANA is expected to generate 4.02 times less return on investment than AmTrust Financial. But when comparing it to its historical volatility, HUMANA INC is 3.37 times less risky than AmTrust Financial. It trades about 0.07 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,273  in AmTrust Financial Services on December 26, 2024 and sell it today you would earn a total of  127.00  from holding AmTrust Financial Services or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

HUMANA INC  vs.  AmTrust Financial Services

HUMANA INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AmTrust Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, AmTrust Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HUMANA and AmTrust Financial

The main advantage of trading using opposite HUMANA and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA 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 HUMANA INC 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.