Correlation Between Aspen Insurance and East Africa
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and East Africa 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 East Africa 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 East Africa Metals, you can compare the effects of market volatilities on Aspen Insurance and East Africa 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 East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and East Africa.
Diversification Opportunities for Aspen Insurance and East Africa
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aspen and East is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals 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 East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and East Africa go up and down completely randomly.
Pair Corralation between Aspen Insurance and East Africa
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 97.46 times less return on investment than East Africa. But when comparing it to its historical volatility, Aspen Insurance Holdings is 45.94 times less risky than East Africa. It trades about 0.04 of its potential returns per unit of risk. East Africa Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7.91 in East Africa Metals on September 3, 2024 and sell it today you would earn a total of 3.09 from holding East Africa Metals or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. East Africa Metals
Performance |
| Timeline |
| Aspen Insurance Holdings |
| East Africa Metals |
Aspen Insurance and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and East Africa
The main advantage of trading using opposite Aspen Insurance and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa'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 |
| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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