Correlation Between AMERISAFE and Tiptree
Can any of the company-specific risk be diversified away by investing in both AMERISAFE and Tiptree 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 AMERISAFE and Tiptree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMERISAFE and Tiptree, you can compare the effects of market volatilities on AMERISAFE and Tiptree 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 AMERISAFE with a short position of Tiptree. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERISAFE and Tiptree.
Diversification Opportunities for AMERISAFE and Tiptree
Very poor diversification
The 3 months correlation between AMERISAFE and Tiptree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree and AMERISAFE 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 AMERISAFE are associated (or correlated) with Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of AMERISAFE i.e., AMERISAFE and Tiptree go up and down completely randomly.
Pair Corralation between AMERISAFE and Tiptree
Given the investment horizon of 90 days AMERISAFE is expected to generate 2.74 times less return on investment than Tiptree. But when comparing it to its historical volatility, AMERISAFE is 1.43 times less risky than Tiptree. It trades about 0.03 of its potential returns per unit of risk. Tiptree is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,363 in Tiptree on August 24, 2024 and sell it today you would earn a total of 835.00 from holding Tiptree or generate 61.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMERISAFE vs. Tiptree
Performance |
| Timeline |
| AMERISAFE |
| Tiptree |
AMERISAFE and Tiptree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERISAFE and Tiptree
The main advantage of trading using opposite AMERISAFE and Tiptree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERISAFE position performs unexpectedly, Tiptree 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 Tiptree will offset losses from the drop in Tiptree's long position.| AMERISAFE vs. Assured Guaranty | AMERISAFE vs. MBIA Inc | AMERISAFE vs. Enact Holdings | AMERISAFE vs. ICC Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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