Correlation Between Allstate and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Allstate and Aspen Insurance 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 Allstate and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and Aspen Insurance Holdings, you can compare the effects of market volatilities on Allstate and Aspen Insurance 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 Allstate with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and Aspen Insurance.
Diversification Opportunities for Allstate and Aspen Insurance
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allstate and Aspen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Aspen Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Insurance Holdings and Allstate 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 The Allstate are associated (or correlated) with Aspen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Insurance Holdings has no effect on the direction of Allstate i.e., Allstate and Aspen Insurance go up and down completely randomly.
Pair Corralation between Allstate and Aspen Insurance
Assuming the 90 days trading horizon The Allstate is expected to under-perform the Aspen Insurance. But the preferred stock apears to be less risky and, when comparing its historical volatility, The Allstate is 1.54 times less risky than Aspen Insurance. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Aspen Insurance Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,114 in Aspen Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Aspen Insurance Holdings or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Allstate vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Allstate |
| Aspen Insurance Holdings |
Allstate and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allstate and Aspen Insurance
The main advantage of trading using opposite Allstate and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate position performs unexpectedly, Aspen Insurance 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 Aspen Insurance will offset losses from the drop in Aspen Insurance's long position.| Allstate vs. Aspen Insurance Holdings | Allstate vs. Aspen Insurance Holdings | Allstate vs. AmTrust Financial Services | Allstate vs. Argo Group International |
| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AXIS Capital Holdings | Aspen Insurance vs. Athene Holding |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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