Correlation Between AmTrust Financial and Enel Chile

Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Enel Chile 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 Enel Chile 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 Enel Chile SA, you can compare the effects of market volatilities on AmTrust Financial and Enel Chile 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 Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Enel Chile.

Diversification Opportunities for AmTrust Financial and Enel Chile

0.12

Correlation Coefficient

AmTrust Financial  Enel Chile

Average diversification

The 3 months correlation between AmTrust and Enel is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA 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 Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Enel Chile go up and down completely randomly.

Pair Corralation between AmTrust Financial and Enel Chile

Assuming the 90 days horizon AmTrust Financial Services is expected to under-perform the Enel Chile. In addition to that, AmTrust Financial is 1.79 times more volatile than Enel Chile SA. It trades about -0.06 of its total potential returns per unit of risk. Enel Chile SA is currently generating about 0.27 per unit of volatility. If you would invest  271.00  in Enel Chile SA on September 26, 2024 and sell it today you would earn a total of  27.00  from holding Enel Chile SA or generate 9.96% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Enel Chile SA

AmTrust Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmTrust Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Enel Chile SA

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AmTrust Financial and Enel Chile

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

The idea behind AmTrust Financial Services and Enel Chile SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.