Correlation Between RLI Corp and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both RLI Corp 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 RLI Corp and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLI Corp and Aspen Insurance Holdings, you can compare the effects of market volatilities on RLI Corp 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 RLI Corp with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLI Corp and Aspen Insurance.
Diversification Opportunities for RLI Corp and Aspen Insurance
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLI and Aspen is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding RLI Corp 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 RLI Corp 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 RLI Corp 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 RLI Corp i.e., RLI Corp and Aspen Insurance go up and down completely randomly.
Pair Corralation between RLI Corp and Aspen Insurance
Considering the 90-day investment horizon RLI Corp is expected to under-perform the Aspen Insurance. In addition to that, RLI Corp is 3.21 times more volatile than Aspen Insurance Holdings. It trades about -0.06 of its total potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.26 per unit of volatility. If you would invest 1,967 in Aspen Insurance Holdings on November 18, 2024 and sell it today you would earn a total of 72.00 from holding Aspen Insurance Holdings or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLI Corp vs. Aspen Insurance Holdings
Performance |
| Timeline |
| RLI Corp |
| Aspen Insurance Holdings |
RLI Corp and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLI Corp and Aspen Insurance
The main advantage of trading using opposite RLI Corp and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLI Corp 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.| RLI Corp vs. Horace Mann Educators | RLI Corp vs. Kemper | RLI Corp vs. Global Indemnity PLC | RLI Corp vs. Argo Group International |
| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AXIS Capital Holdings | Aspen Insurance vs. Athene Holding | Aspen Insurance vs. The Allstate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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