Correlation Between AmTrust Financial and Admiral Group
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Admiral Group 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 Admiral Group 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 Admiral Group plc, you can compare the effects of market volatilities on AmTrust Financial and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Admiral Group.
Diversification Opportunities for AmTrust Financial and Admiral Group
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AmTrust and Admiral is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Admiral Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group plc 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group plc has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Admiral Group go up and down completely randomly.
Pair Corralation between AmTrust Financial and Admiral Group
Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.74 times more return on investment than Admiral Group. However, AmTrust Financial Services is 1.35 times less risky than Admiral Group. It trades about 0.15 of its potential returns per unit of risk. Admiral Group plc is currently generating about -0.26 per unit of risk. If you would invest 1,355 in AmTrust Financial Services on September 3, 2024 and sell it today you would earn a total of 47.00 from holding AmTrust Financial Services or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmTrust Financial Services vs. Admiral Group plc
Performance |
| Timeline |
| AmTrust Financial |
| Admiral Group plc |
AmTrust Financial and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmTrust Financial and Admiral Group
The main advantage of trading using opposite AmTrust Financial and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group's long position.| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
| Admiral Group vs. AmTrust Financial Services | Admiral Group vs. AmTrust Financial Services | Admiral Group vs. AmTrust Financial Services | Admiral Group vs. AmTrust Financial Services |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |