Correlation Between Aspen Insurance and Global Indemnity
Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Global Indemnity 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 Global Indemnity 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 Global Indemnity PLC, you can compare the effects of market volatilities on Aspen Insurance and Global Indemnity 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 Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Global Indemnity.
Diversification Opportunities for Aspen Insurance and Global Indemnity
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aspen and Global is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Global Indemnity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Indemnity 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 Global Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Indemnity PLC has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Global Indemnity go up and down completely randomly.
Pair Corralation between Aspen Insurance and Global Indemnity
Assuming the 90 days trading horizon Aspen Insurance is expected to generate 3.43 times less return on investment than Global Indemnity. In addition to that, Aspen Insurance is 1.52 times more volatile than Global Indemnity PLC. It trades about 0.03 of its total potential returns per unit of risk. Global Indemnity PLC is currently generating about 0.16 per unit of volatility. If you would invest 3,400 in Global Indemnity PLC on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Global Indemnity PLC or generate 3.35% 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. Global Indemnity PLC
Performance |
| Timeline |
| Aspen Insurance Holdings |
| Global Indemnity PLC |
Aspen Insurance and Global Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Insurance and Global Indemnity
The main advantage of trading using opposite Aspen Insurance and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Global Indemnity 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 Global Indemnity will offset losses from the drop in Global Indemnity's long position.| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AXIS Capital Holdings | Aspen Insurance vs. Athene Holding |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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