Correlation Between AmTrust Financial and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Algoma Steel 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 Algoma Steel 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 Algoma Steel Group, you can compare the effects of market volatilities on AmTrust Financial and Algoma Steel 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 Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Algoma Steel.
Diversification Opportunities for AmTrust Financial and Algoma Steel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AmTrust and Algoma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group 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 Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Algoma Steel go up and down completely randomly.
Pair Corralation between AmTrust Financial and Algoma Steel
Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.89 times more return on investment than Algoma Steel. However, AmTrust Financial Services is 1.12 times less risky than Algoma Steel. It trades about 0.06 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.02 per unit of risk. If you would invest 1,356 in AmTrust Financial Services on September 12, 2024 and sell it today you would earn a total of 94.00 from holding AmTrust Financial Services or generate 6.93% 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. Algoma Steel Group
Performance |
| Timeline |
| AmTrust Financial |
| Algoma Steel Group |
AmTrust Financial and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmTrust Financial and Algoma Steel
The main advantage of trading using opposite AmTrust Financial and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel'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 |
| Algoma Steel vs. Olympic Steel | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. Commercial Metals | Algoma Steel vs. Nucor Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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