Correlation Between Global Indemnity and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Global Indemnity and AmTrust Financial 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 Global Indemnity and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Indemnity PLC and AmTrust Financial Services, you can compare the effects of market volatilities on Global Indemnity and AmTrust Financial 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 Global Indemnity with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and AmTrust Financial.
Diversification Opportunities for Global Indemnity and AmTrust Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and AmTrust is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Global Indemnity 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 Global Indemnity PLC are associated (or correlated) with AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Global Indemnity i.e., Global Indemnity and AmTrust Financial go up and down completely randomly.
Pair Corralation between Global Indemnity and AmTrust Financial
Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 0.94 times more return on investment than AmTrust Financial. However, Global Indemnity PLC is 1.07 times less risky than AmTrust Financial. It trades about 0.16 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.09 per unit of risk. If you would invest 3,400 in Global Indemnity PLC on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Global Indemnity PLC or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Indemnity PLC vs. AmTrust Financial Services
Performance |
| Timeline |
| Global Indemnity PLC |
| AmTrust Financial |
Global Indemnity and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Indemnity and AmTrust Financial
The main advantage of trading using opposite Global Indemnity and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial's long position.| Global Indemnity vs. Fiverr International | Global Indemnity vs. Pinterest | Global Indemnity vs. Upstart Holdings | Global Indemnity vs. Fastly Inc |
| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. Aspen Insurance 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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