Correlation Between Aspen Insurance and Admiral Group
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Admiral Group 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 Admiral Group 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 Admiral Group plc, you can compare the effects of market volatilities on Aspen Insurance and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Admiral Group.
Diversification Opportunities for Aspen Insurance and Admiral Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and Admiral is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Admiral Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group plc 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group plc has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Admiral Group go up and down completely randomly.
Pair Corralation between Aspen Insurance and Admiral Group
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 5.29 times less return on investment than Admiral Group. But when comparing it to its historical volatility, Aspen Insurance Holdings is 2.19 times less risky than Admiral Group. It trades about 0.05 of its potential returns per unit of risk. Admiral Group plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,624 in Admiral Group plc on December 1, 2024 and sell it today you would earn a total of 865.00 from holding Admiral Group plc or generate 32.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 21.9% |
| Values | Daily Returns |
Aspen Insurance Holdings vs. Admiral Group plc
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Admiral Group plc |
Aspen Insurance and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Admiral Group
The main advantage of trading using opposite Aspen Insurance and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group'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 |
| Admiral Group vs. Aspen Insurance Holdings | Admiral Group vs. AmTrust Financial Services | Admiral Group vs. AmTrust Financial Services | Admiral Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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