Correlation Between AmTrust Financial and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Progressive 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 AmTrust Financial and Progressive Corp 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 Progressive Corp, you can compare the effects of market volatilities on AmTrust Financial and Progressive 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 AmTrust Financial with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Progressive Corp.
Diversification Opportunities for AmTrust Financial and Progressive Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AmTrust and Progressive is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp 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 Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Progressive Corp go up and down completely randomly.
Pair Corralation between AmTrust Financial and Progressive Corp
Assuming the 90 days horizon AmTrust Financial is expected to generate 1.66 times less return on investment than Progressive Corp. But when comparing it to its historical volatility, AmTrust Financial Services is 1.03 times less risky than Progressive Corp. It trades about 0.21 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 24,283 in Progressive Corp on September 1, 2024 and sell it today you would earn a total of 2,605 from holding Progressive Corp or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmTrust Financial Services vs. Progressive Corp
Performance |
| Timeline |
| AmTrust Financial |
| Progressive Corp |
AmTrust Financial and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmTrust Financial and Progressive Corp
The main advantage of trading using opposite AmTrust Financial and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Progressive 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 Progressive Corp will offset losses from the drop in Progressive Corp'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 |
| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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