Correlation Between Visa and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Aspen Insurance Holdings, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Aspen Insurance.
Diversification Opportunities for Visa and Aspen Insurance
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Aspen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Aspen Insurance go up and down completely randomly.
Pair Corralation between Visa and Aspen Insurance
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.06 times more return on investment than Aspen Insurance. However, Visa is 2.06 times more volatile than Aspen Insurance Holdings. It trades about 0.36 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about -0.22 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Visa Class A |
| Aspen Insurance Holdings |
Visa and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Aspen Insurance
The main advantage of trading using opposite Visa and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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