Correlation Between Aspen Insurance and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance 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 Aspen Insurance and AmTrust Financial 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 AmTrust Financial Services, you can compare the effects of market volatilities on Aspen Insurance 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 Aspen Insurance with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and AmTrust Financial.
Diversification Opportunities for Aspen Insurance and AmTrust Financial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aspen and AmTrust is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial 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 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 Aspen Insurance i.e., Aspen Insurance and AmTrust Financial go up and down completely randomly.
Pair Corralation between Aspen Insurance and AmTrust Financial
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 1.27 times more return on investment than AmTrust Financial. However, Aspen Insurance is 1.27 times more volatile than AmTrust Financial Services. It trades about 0.09 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.09 per unit of risk. If you would invest 2,096 in Aspen Insurance Holdings on August 25, 2024 and sell it today you would earn a total of 63.00 from holding Aspen Insurance Holdings or generate 3.01% 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. AmTrust Financial Services
Performance |
| Timeline |
| Aspen Insurance Holdings |
| AmTrust Financial |
Aspen Insurance and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and AmTrust Financial
The main advantage of trading using opposite Aspen Insurance and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance 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.| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Selective Insurance Group | Aspen Insurance vs. The Allstate | Aspen Insurance vs. AmTrust Financial Services |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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