Correlation Between Aspen Insurance and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Analog Devices 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 Analog Devices 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 Analog Devices, you can compare the effects of market volatilities on Aspen Insurance and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Analog Devices.
Diversification Opportunities for Aspen Insurance and Analog Devices
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aspen and Analog is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Analog Devices go up and down completely randomly.
Pair Corralation between Aspen Insurance and Analog Devices
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 1.45 times less return on investment than Analog Devices. But when comparing it to its historical volatility, Aspen Insurance Holdings is 1.22 times less risky than Analog Devices. It trades about 0.03 of its potential returns per unit of risk. Analog Devices is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16,259 in Analog Devices on August 24, 2024 and sell it today you would earn a total of 5,200 from holding Analog Devices or generate 31.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. Analog Devices
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Analog Devices |
Aspen Insurance and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Analog Devices
The main advantage of trading using opposite Aspen Insurance and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' 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 |
| Analog Devices vs. Eshallgo Class A | Analog Devices vs. Amtech Systems | Analog Devices vs. Gold Fields Ltd | Analog Devices vs. Aegean Airlines SA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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