Correlation Between Bank of America and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Aspen Insurance Holdings, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aspen Insurance.
Diversification Opportunities for Bank of America and Aspen Insurance
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Aspen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Aspen Insurance go up and down completely randomly.
Pair Corralation between Bank of America and Aspen Insurance
Considering the 90-day investment horizon Bank of America is expected to generate 3.34 times more return on investment than Aspen Insurance. However, Bank of America is 3.34 times more volatile than Aspen Insurance Holdings. It trades about 0.23 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about -0.19 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 466.00 from holding Bank of America or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Bank of America |
| Aspen Insurance Holdings |
Bank of America and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aspen Insurance
The main advantage of trading using opposite Bank of America and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Aspen Insurance vs. The Allstate | Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AmTrust Financial Services | Aspen Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |