Correlation Between PulteGroup and Ameritrust Corp

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

By analyzing existing cross correlation between PulteGroup and Ameritrust Corp, you can compare the effects of market volatilities on PulteGroup and Ameritrust Corp 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 PulteGroup with a short position of Ameritrust Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PulteGroup and Ameritrust Corp.

Diversification Opportunities for PulteGroup and Ameritrust Corp

0.0

Correlation Coefficient

PulteGroup  Ameritrust Corp

Pay attention - limited upside

The 3 months correlation between PulteGroup and Ameritrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PulteGroup and Ameritrust Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrust Corp and PulteGroup 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 PulteGroup are associated (or correlated) with Ameritrust Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrust Corp has no effect on the direction of PulteGroup i.e., PulteGroup and Ameritrust Corp go up and down completely randomly.

Pair Corralation between PulteGroup and Ameritrust Corp

Considering the 90-day investment horizon PulteGroup is expected to generate 5.44 times less return on investment than Ameritrust Corp. But when comparing it to its historical volatility, PulteGroup is 11.31 times less risky than Ameritrust Corp. It trades about 0.1 of its potential returns per unit of risk. Ameritrust Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Ameritrust Corp on January 20, 2024 and sell it today you would lose (0.08) from holding Ameritrust Corp or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

PulteGroup  vs.  Ameritrust Corp

PulteGroup

Risk-Adjusted Performance

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Very Weak

Over the last 90 days PulteGroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, PulteGroup is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ameritrust Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameritrust Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ameritrust Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PulteGroup and Ameritrust Corp

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

The idea behind PulteGroup and Ameritrust Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.