Correlation Between AmTrust Financial and 12505BAD2

Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and 12505BAD2 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 12505BAD2 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 CBRE SVCS INC, you can compare the effects of market volatilities on AmTrust Financial and 12505BAD2 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 12505BAD2. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and 12505BAD2.

Diversification Opportunities for AmTrust Financial and 12505BAD2

-0.41

Correlation Coefficient

AmTrust Financial  12505BAD2

Very good diversification

The 3 months correlation between AmTrust and 12505BAD2 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and CBRE SVCS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE SVCS INC 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 12505BAD2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE SVCS INC has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and 12505BAD2 go up and down completely randomly.

Pair Corralation between AmTrust Financial and 12505BAD2

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 10.92 times more return on investment than 12505BAD2. However, AmTrust Financial is 10.92 times more volatile than CBRE SVCS INC. It trades about 0.06 of its potential returns per unit of risk. CBRE SVCS INC is currently generating about -0.05 per unit of risk. If you would invest  1,356  in AmTrust Financial Services on September 12, 2024 and sell it today you would earn a total of  96.00  from holding AmTrust Financial Services or generate 7.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

AmTrust Financial Services  vs.  CBRE SVCS INC

AmTrust Financial

Risk-Adjusted Performance

5 of 100

Modest

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.

CBRE SVCS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBRE SVCS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 12505BAD2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AmTrust Financial and 12505BAD2

The main advantage of trading using opposite AmTrust Financial and 12505BAD2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, 12505BAD2 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 12505BAD2 will offset losses from the drop in 12505BAD2's long position.

The idea behind AmTrust Financial Services and CBRE SVCS INC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.