Correlation Between Aspen Insurance and Citizens
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on Aspen Insurance and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Citizens.
Diversification Opportunities for Aspen Insurance and Citizens
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aspen and Citizens is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Citizens go up and down completely randomly.
Pair Corralation between Aspen Insurance and Citizens
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 83.32 times less return on investment than Citizens. But when comparing it to its historical volatility, Aspen Insurance Holdings is 2.86 times less risky than Citizens. It trades about 0.01 of its potential returns per unit of risk. Citizens is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Citizens on November 30, 2024 and sell it today you would earn a total of 81.00 from holding Citizens or generate 20.25% 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. Citizens
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Citizens |
Aspen Insurance and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Citizens
The main advantage of trading using opposite Aspen Insurance and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' 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 |
| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential PLC ADR |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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