Correlation Between AmTrust Financial and Hudson Pacific

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

Diversification Opportunities for AmTrust Financial and Hudson Pacific

-0.62

Correlation Coefficient

AmTrust Financial  Hudson Pacific

Excellent diversification

The 3 months correlation between AmTrust and Hudson is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific Properties 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 Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Hudson Pacific go up and down completely randomly.

Pair Corralation between AmTrust Financial and Hudson Pacific

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.53 times more return on investment than Hudson Pacific. However, AmTrust Financial Services is 1.88 times less risky than Hudson Pacific. It trades about -0.04 of its potential returns per unit of risk. Hudson Pacific Properties is currently generating about -0.11 per unit of risk. If you would invest  1,452  in AmTrust Financial Services on September 27, 2024 and sell it today you would lose (51.00) from holding AmTrust Financial Services or give up 3.51% of portfolio value over 90 days.

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

AmTrust Financial Services  vs.  Hudson Pacific Properties

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.

Hudson Pacific Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AmTrust Financial and Hudson Pacific

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

The idea behind AmTrust Financial Services and Hudson Pacific Properties 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.