Correlation Between Aspen Insurance and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Ambev SA 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 Ambev SA 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 Ambev SA ADR, you can compare the effects of market volatilities on Aspen Insurance and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Ambev SA.
Diversification Opportunities for Aspen Insurance and Ambev SA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aspen and Ambev is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Ambev SA go up and down completely randomly.
Pair Corralation between Aspen Insurance and Ambev SA
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to under-perform the Ambev SA. But the preferred stock apears to be less risky and, when comparing its historical volatility, Aspen Insurance Holdings is 1.96 times less risky than Ambev SA. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Ambev SA ADR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 183.00 in Ambev SA ADR on November 28, 2024 and sell it today you would earn a total of 16.00 from holding Ambev SA ADR or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. Ambev SA ADR
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Ambev SA ADR |
Aspen Insurance and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Ambev SA
The main advantage of trading using opposite Aspen Insurance and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Selective Insurance Group | Aspen Insurance vs. The Allstate | Aspen Insurance vs. AmTrust Financial Services |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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