Correlation Between Kemper and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Kemper 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 Kemper and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kemper and Aspen Insurance Holdings, you can compare the effects of market volatilities on Kemper 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 Kemper with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemper and Aspen Insurance.
Diversification Opportunities for Kemper and Aspen Insurance
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kemper and Aspen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kemper 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 Kemper 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 Kemper 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 Kemper i.e., Kemper and Aspen Insurance go up and down completely randomly.
Pair Corralation between Kemper and Aspen Insurance
Given the investment horizon of 90 days Kemper is expected to generate 0.98 times more return on investment than Aspen Insurance. However, Kemper is 1.02 times less risky than Aspen Insurance. It trades about 0.37 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.03 per unit of risk. If you would invest 6,406 in Kemper on August 28, 2024 and sell it today you would earn a total of 789.00 from holding Kemper or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kemper vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Kemper |
| Aspen Insurance Holdings |
Kemper and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kemper and Aspen Insurance
The main advantage of trading using opposite Kemper and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper 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.The idea behind Kemper and Aspen Insurance Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 CEOs Directory module to screen CEOs from public companies around the world.
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