Correlation Between AmTrust Financial and Anheuser Busch

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

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

Diversification Opportunities for AmTrust Financial and Anheuser Busch

-0.83

Correlation Coefficient

AmTrust Financial  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between AmTrust and Anheuser is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and AmTrust Financial 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 AmTrust Financial Services are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Anheuser Busch go up and down completely randomly.

Pair Corralation between AmTrust Financial and Anheuser Busch

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 3.45 times more return on investment than Anheuser Busch. However, AmTrust Financial is 3.45 times more volatile than Anheuser Busch Inbev. It trades about 0.05 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.43 per unit of risk. If you would invest  1,423  in AmTrust Financial Services on September 12, 2024 and sell it today you would earn a total of  29.00  from holding AmTrust Financial Services or generate 2.04% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Anheuser Busch Inbev

AmTrust Financial

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, AmTrust Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AmTrust Financial and Anheuser Busch

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

The idea behind AmTrust Financial Services and Anheuser Busch Inbev 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.