Correlation Between Waste Management and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Aspen Insurance Holdings, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Aspen Insurance.
Diversification Opportunities for Waste Management and Aspen Insurance
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Waste and Aspen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management 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 Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Aspen Insurance go up and down completely randomly.
Pair Corralation between Waste Management and Aspen Insurance
Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.96 times more return on investment than Aspen Insurance. However, Waste Management is 1.04 times less risky than Aspen Insurance. It trades about 0.11 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.06 per unit of risk. If you would invest 21,127 in Waste Management on August 30, 2024 and sell it today you would earn a total of 1,719 from holding Waste Management or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Waste Management |
| Aspen Insurance Holdings |
Waste Management and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Aspen Insurance
The main advantage of trading using opposite Waste Management and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Selective Insurance Group | Aspen Insurance vs. The Allstate | Aspen Insurance vs. AmTrust Financial Services |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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