Correlation Between AmTrust Financial and Sezzle Common

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

Diversification Opportunities for AmTrust Financial and Sezzle Common

0.77

Correlation Coefficient

AmTrust Financial  Sezzle Common

Poor diversification

The 3 months correlation between AmTrust and Sezzle is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Sezzle Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sezzle Common Stock 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 Sezzle Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sezzle Common Stock has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Sezzle Common go up and down completely randomly.

Pair Corralation between AmTrust Financial and Sezzle Common

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.52 times more return on investment than Sezzle Common. However, AmTrust Financial Services is 1.93 times less risky than Sezzle Common. It trades about 0.04 of its potential returns per unit of risk. Sezzle Common Stock is currently generating about -0.16 per unit of risk. If you would invest  1,424  in AmTrust Financial Services on September 16, 2024 and sell it today you would earn a total of  26.00  from holding AmTrust Financial Services or generate 1.83% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Sezzle Common Stock

AmTrust Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 4 (%) 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.

Sezzle Common Stock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sezzle Common Stock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Sezzle Common disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AmTrust Financial and Sezzle Common

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

The idea behind AmTrust Financial Services and Sezzle Common Stock 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.