Correlation Between Coca Cola and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and AmTrust Financial Services, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and AmTrust Financial.
Diversification Opportunities for Coca Cola and AmTrust Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and AmTrust is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and AmTrust Financial go up and down completely randomly.
Pair Corralation between Coca Cola and AmTrust Financial
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the AmTrust Financial. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.46 times less risky than AmTrust Financial. The stock trades about -0.16 of its potential returns per unit of risk. The AmTrust Financial Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,475 in AmTrust Financial Services on August 29, 2024 and sell it today you would earn a total of 10.00 from holding AmTrust Financial Services or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. AmTrust Financial Services
Performance |
| Timeline |
| Coca Cola |
| AmTrust Financial |
Coca Cola and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and AmTrust Financial
The main advantage of trading using opposite Coca Cola and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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