Correlation Between AmTrust Financial and Davis Commodities
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Davis Commodities 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 Davis Commodities 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 Davis Commodities Limited, you can compare the effects of market volatilities on AmTrust Financial and Davis Commodities 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 Davis Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Davis Commodities.
Diversification Opportunities for AmTrust Financial and Davis Commodities
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AmTrust and Davis is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Davis Commodities go up and down completely randomly.
Pair Corralation between AmTrust Financial and Davis Commodities
Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.27 times more return on investment than Davis Commodities. However, AmTrust Financial Services is 3.69 times less risky than Davis Commodities. It trades about 0.04 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.02 per unit of risk. If you would invest 1,125 in AmTrust Financial Services on September 2, 2024 and sell it today you would earn a total of 335.00 from holding AmTrust Financial Services or generate 29.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.72% |
| Values | Daily Returns |
AmTrust Financial Services vs. Davis Commodities Limited
Performance |
| Timeline |
| AmTrust Financial |
| Davis Commodities |
AmTrust Financial and Davis Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmTrust Financial and Davis Commodities
The main advantage of trading using opposite AmTrust Financial and Davis Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Davis Commodities 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 Davis Commodities will offset losses from the drop in Davis Commodities' 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 |
| Davis Commodities vs. SunLink Health Systems | Davis Commodities vs. Visteon Corp | Davis Commodities vs. Adient PLC | Davis Commodities vs. Amgen Inc |
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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