Correlation Between Aspen Insurance and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and WR Berkley 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 WR Berkley 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 WR Berkley, you can compare the effects of market volatilities on Aspen Insurance and WR Berkley 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 WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and WR Berkley.
Diversification Opportunities for Aspen Insurance and WR Berkley
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aspen and WRB-PH is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley 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 WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and WR Berkley go up and down completely randomly.
Pair Corralation between Aspen Insurance and WR Berkley
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 1.69 times more return on investment than WR Berkley. However, Aspen Insurance is 1.69 times more volatile than WR Berkley. It trades about 0.09 of its potential returns per unit of risk. WR Berkley is currently generating about -0.3 per unit of risk. If you would invest 2,137 in Aspen Insurance Holdings on August 27, 2024 and sell it today you would earn a total of 60.00 from holding Aspen Insurance Holdings or generate 2.81% 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. WR Berkley
Performance |
| Timeline |
| Aspen Insurance Holdings |
| WR Berkley |
Aspen Insurance and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and WR Berkley
The main advantage of trading using opposite Aspen Insurance and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, WR Berkley 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 WR Berkley will offset losses from the drop in WR Berkley'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 |
| WR Berkley vs. Aspen Insurance Holdings | WR Berkley vs. Selective Insurance Group | WR Berkley vs. Aspen Insurance Holdings | WR Berkley 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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