Correlation Between Aspen Insurance and Allstate
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Allstate 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 Allstate 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 The Allstate, you can compare the effects of market volatilities on Aspen Insurance and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Allstate.
Diversification Opportunities for Aspen Insurance and Allstate
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and Allstate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Allstate go up and down completely randomly.
Pair Corralation between Aspen Insurance and Allstate
Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to under-perform the Allstate. In addition to that, Aspen Insurance is 1.24 times more volatile than The Allstate. It trades about -0.03 of its total potential returns per unit of risk. The Allstate is currently generating about 0.03 per unit of volatility. If you would invest 2,229 in The Allstate on November 1, 2024 and sell it today you would earn a total of 45.00 from holding The Allstate or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. The Allstate
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Allstate |
Aspen Insurance and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Allstate
The main advantage of trading using opposite Aspen Insurance and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AXIS Capital Holdings | Aspen Insurance vs. Athene Holding | Aspen Insurance vs. The Allstate |
| Allstate vs. The Allstate | Allstate vs. Aspen Insurance Holdings | Allstate vs. AmTrust Financial Services | Allstate vs. Argo Group International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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