Correlation Between Aspen Insurance and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Aspen Insurance and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Merit Medical.
Diversification Opportunities for Aspen Insurance and Merit Medical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aspen and Merit is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Merit Medical go up and down completely randomly.
Pair Corralation between Aspen Insurance and Merit Medical
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 2.49 times less return on investment than Merit Medical. But when comparing it to its historical volatility, Aspen Insurance Holdings is 1.09 times less risky than Merit Medical. It trades about 0.07 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8,333 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 2,057 from holding Merit Medical Systems or generate 24.68% 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. Merit Medical Systems
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Merit Medical Systems |
Aspen Insurance and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Merit Medical
The main advantage of trading using opposite Aspen Insurance and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical'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 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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