Correlation Between Horace Mann and AmTrust Financial

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

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

Diversification Opportunities for Horace Mann and AmTrust Financial

0.76

Correlation Coefficient

Horace Mann  AmTrust Financial

Poor diversification

The 3 months correlation between Horace and AmTrust is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Horace Mann Educators and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Horace Mann 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 Horace Mann Educators 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 Horace Mann i.e., Horace Mann and AmTrust Financial go up and down completely randomly.

Pair Corralation between Horace Mann and AmTrust Financial

Considering the 90-day investment horizon Horace Mann is expected to generate 1.87 times less return on investment than AmTrust Financial. But when comparing it to its historical volatility, Horace Mann Educators is 1.46 times less risky than AmTrust Financial. It trades about 0.04 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Horace Mann Educators  vs.  AmTrust Financial Services

Horace Mann Educators

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Horace Mann displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Horace Mann and AmTrust Financial

The main advantage of trading using opposite Horace Mann and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horace Mann 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.

The idea behind Horace Mann Educators and AmTrust Financial Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.