Correlation Between Aspen Insurance and Kemper
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance 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 Aspen Insurance and Kemper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Insurance Holdings and Kemper, you can compare the effects of market volatilities on Aspen Insurance 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 Aspen Insurance with a short position of Kemper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Kemper.
Diversification Opportunities for Aspen Insurance and Kemper
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aspen and Kemper is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Aspen Insurance 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 Aspen Insurance Holdings 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 Aspen Insurance i.e., Aspen Insurance and Kemper go up and down completely randomly.
Pair Corralation between Aspen Insurance and Kemper
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 6.55 times less return on investment than Kemper. But when comparing it to its historical volatility, Aspen Insurance Holdings is 3.76 times less risky than Kemper. It trades about 0.07 of its potential returns per unit of risk. Kemper is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,234 in Kemper on August 24, 2024 and sell it today you would earn a total of 2,976 from holding Kemper or generate 70.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. Kemper
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Kemper |
Aspen Insurance and Kemper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Kemper
The main advantage of trading using opposite Aspen Insurance and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance 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.| Aspen Insurance vs. The Allstate | Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AmTrust Financial Services | Aspen Insurance vs. Argo Group International |
| Kemper vs. Amtech Systems | Kemper vs. Gold Fields Ltd | Kemper vs. Aegean Airlines SA | Kemper vs. Merck Company |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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