Correlation Between Aspen Insurance and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on Aspen Insurance and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Treasury Wine.
Diversification Opportunities for Aspen Insurance and Treasury Wine
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aspen and Treasury is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Treasury Wine go up and down completely randomly.
Pair Corralation between Aspen Insurance and Treasury Wine
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 0.77 times more return on investment than Treasury Wine. However, Aspen Insurance Holdings is 1.3 times less risky than Treasury Wine. It trades about 0.12 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.22 per unit of risk. If you would invest 2,127 in Aspen Insurance Holdings on September 3, 2024 and sell it today you would earn a total of 81.00 from holding Aspen Insurance Holdings or generate 3.81% 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. Treasury Wine Estates
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Treasury Wine Estates |
Aspen Insurance and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Treasury Wine
The main advantage of trading using opposite Aspen Insurance and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine'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 |
| Treasury Wine vs. Diageo plc | Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Constellation Brands Class |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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