Correlation Between Aspen Insurance and Infosys
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Infosys 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 Infosys 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 Infosys Ltd ADR, you can compare the effects of market volatilities on Aspen Insurance and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Infosys.
Diversification Opportunities for Aspen Insurance and Infosys
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aspen and Infosys is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Infosys go up and down completely randomly.
Pair Corralation between Aspen Insurance and Infosys
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 1.0 times more return on investment than Infosys. However, Aspen Insurance Holdings is 1.0 times less risky than Infosys. It trades about 0.04 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.04 per unit of risk. If you would invest 1,698 in Aspen Insurance Holdings on September 4, 2024 and sell it today you would earn a total of 500.00 from holding Aspen Insurance Holdings or generate 29.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. Infosys Ltd ADR
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Infosys Ltd ADR |
Aspen Insurance and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Infosys
The main advantage of trading using opposite Aspen Insurance and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' 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 |
| Infosys vs. Cognizant Technology Solutions | Infosys vs. WNS Holdings | Infosys vs. CLARIVATE PLC | Infosys vs. Gartner |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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