Correlation Between AmTrust Financial and Solaris Energy

Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Solaris Energy 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 Solaris Energy 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 Solaris Energy Infrastructure,, you can compare the effects of market volatilities on AmTrust Financial and Solaris Energy 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 Solaris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Solaris Energy.

Diversification Opportunities for AmTrust Financial and Solaris Energy

0.47

Correlation Coefficient

AmTrust Financial  Solaris Energy

Very weak diversification

The 3 months correlation between AmTrust and Solaris is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Solaris Energy Infrastructure, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Energy Infra 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 Solaris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Energy Infra has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Solaris Energy go up and down completely randomly.

Pair Corralation between AmTrust Financial and Solaris Energy

Assuming the 90 days horizon AmTrust Financial is expected to generate 142.67 times less return on investment than Solaris Energy. In addition to that, AmTrust Financial is 1.09 times more volatile than Solaris Energy Infrastructure,. It trades about 0.0 of its total potential returns per unit of risk. Solaris Energy Infrastructure, is currently generating about 0.1 per unit of volatility. If you would invest  1,276  in Solaris Energy Infrastructure, on August 1, 2024 and sell it today you would earn a total of  47.00  from holding Solaris Energy Infrastructure, or generate 3.68% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Solaris Energy Infrastructure,

AmTrust Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, AmTrust Financial may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Solaris Energy Infra

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Solaris Energy Infrastructure, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Solaris Energy may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with AmTrust Financial and Solaris Energy

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

The idea behind AmTrust Financial Services and Solaris Energy Infrastructure, 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.