Correlation Between AmTrust Financial and W R

Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and W R 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 AmTrust Financial and W R into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AmTrust Financial Services and W R Berkley, you can compare the effects of market volatilities on AmTrust Financial and W R 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 AmTrust Financial with a short position of W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and W R.

Diversification Opportunities for AmTrust Financial and W R

-0.2

Correlation Coefficient

AmTrust Financial  W R

Good diversification

The 3 months correlation between AmTrust and WRB-PE is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley and AmTrust Financial 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 AmTrust Financial Services are associated (or correlated) with W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and W R go up and down completely randomly.

Pair Corralation between AmTrust Financial and W R

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 2.92 times more return on investment than W R. However, AmTrust Financial is 2.92 times more volatile than W R Berkley. It trades about -0.03 of its potential returns per unit of risk. W R Berkley is currently generating about -0.1 per unit of risk. If you would invest  1,420  in AmTrust Financial Services on August 23, 2024 and sell it today you would lose (19.00) from holding AmTrust Financial Services or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AmTrust Financial Services  vs.  W R Berkley

AmTrust Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, AmTrust Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

W R Berkley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, W R is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AmTrust Financial and W R

The main advantage of trading using opposite AmTrust Financial and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, W R 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 W R will offset losses from the drop in W R's long position.

The idea behind AmTrust Financial Services and W R Berkley pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.