Correlation Between Allcity Insurance and AmTrust Financial

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

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

Diversification Opportunities for Allcity Insurance and AmTrust Financial

0.0

Correlation Coefficient

Allcity Insurance  AmTrust Financial

Pay attention - limited upside

The 3 months correlation between Allcity and AmTrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allcity Insurance Co and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Allcity Insurance 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 Allcity Insurance Co 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 Allcity Insurance i.e., Allcity Insurance and AmTrust Financial go up and down completely randomly.

Pair Corralation between Allcity Insurance and AmTrust Financial

If you would invest  0.00  in AmTrust Financial Services on January 24, 2024 and sell it today you would earn a total of  0.00  from holding AmTrust Financial Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Allcity Insurance Co  vs.  AmTrust Financial Services

Allcity Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allcity Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Allcity Insurance is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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. Despite fairly strong basic indicators, AmTrust Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Allcity Insurance and AmTrust Financial

The main advantage of trading using opposite Allcity Insurance and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allcity Insurance 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 Allcity Insurance Co 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.