Correlation Between Boston Beer and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and AmTrust Financial Services, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and AmTrust Financial.
Diversification Opportunities for Boston Beer and AmTrust Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and AmTrust is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and AmTrust Financial go up and down completely randomly.
Pair Corralation between Boston Beer and AmTrust Financial
Considering the 90-day investment horizon Boston Beer is expected to generate 3.19 times less return on investment than AmTrust Financial. In addition to that, Boston Beer is 1.08 times more volatile than AmTrust Financial Services. It trades about 0.01 of its total potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.05 per unit of volatility. If you would invest 1,038 in AmTrust Financial Services on August 31, 2024 and sell it today you would earn a total of 422.00 from holding AmTrust Financial Services or generate 40.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. AmTrust Financial Services
Performance |
| Timeline |
| Boston Beer |
| AmTrust Financial |
Boston Beer and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and AmTrust Financial
The main advantage of trading using opposite Boston Beer and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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