Correlation Between Artisan Partners and AmTrust Financial

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

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

Diversification Opportunities for Artisan Partners and AmTrust Financial

0.74

Correlation Coefficient

Artisan Partners  AmTrust Financial

Poor diversification

The 3 months correlation between Artisan and AmTrust is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Artisan Partners 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 Artisan Partners Asset are associated (or correlated) with AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Artisan Partners i.e., Artisan Partners and AmTrust Financial go up and down completely randomly.

Pair Corralation between Artisan Partners and AmTrust Financial

Given the investment horizon of 90 days Artisan Partners Asset is expected to generate 0.82 times more return on investment than AmTrust Financial. However, Artisan Partners Asset is 1.22 times less risky than AmTrust Financial. It trades about 0.07 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.05 per unit of risk. If you would invest  3,337  in Artisan Partners Asset on September 12, 2024 and sell it today you would earn a total of  1,517  from holding Artisan Partners Asset or generate 45.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Artisan Partners Asset  vs.  AmTrust Financial Services

Artisan Partners Asset

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Artisan Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Artisan Partners and AmTrust Financial

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

The idea behind Artisan Partners Asset and AmTrust Financial Services 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.