Correlation Between United Homes and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both United Homes 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 United Homes and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and AmTrust Financial Services, you can compare the effects of market volatilities on United Homes 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 United Homes with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and AmTrust Financial.
Diversification Opportunities for United Homes and AmTrust Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and AmTrust is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and United Homes 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 United Homes Group 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 United Homes i.e., United Homes and AmTrust Financial go up and down completely randomly.
Pair Corralation between United Homes and AmTrust Financial
Considering the 90-day investment horizon United Homes Group is expected to generate 2.67 times more return on investment than AmTrust Financial. However, United Homes is 2.67 times more volatile than AmTrust Financial Services. It trades about 0.06 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.05 per unit of risk. If you would invest 580.00 in United Homes Group on September 3, 2024 and sell it today you would earn a total of 58.00 from holding United Homes Group or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. AmTrust Financial Services
Performance |
| Timeline |
| United Homes Group |
| AmTrust Financial |
United Homes and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and AmTrust Financial
The main advantage of trading using opposite United Homes and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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.| United Homes vs. Aegon NV ADR | United Homes vs. Sphere Entertainment Co | United Homes vs. Old Republic International | United Homes vs. SEI Investments |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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