Correlation Between AmTrust Financial and Kemper

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

Diversification Opportunities for AmTrust Financial and Kemper

0.39

Correlation Coefficient

AmTrust Financial  Kemper

Weak diversification

The 3 months correlation between AmTrust and Kemper is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Kemper go up and down completely randomly.

Pair Corralation between AmTrust Financial and Kemper

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 1.06 times more return on investment than Kemper. However, AmTrust Financial is 1.06 times more volatile than Kemper. It trades about 0.05 of its potential returns per unit of risk. Kemper is currently generating about 0.02 per unit of risk. If you would invest  1,016  in AmTrust Financial Services on August 3, 2024 and sell it today you would earn a total of  385.00  from holding AmTrust Financial Services or generate 37.89% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Kemper

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. Despite somewhat weak forward indicators, AmTrust Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kemper

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AmTrust Financial and Kemper

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

The idea behind AmTrust Financial Services and Kemper 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.