Correlation Between Aspen Insurance and Hamilton Insurance

Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and Hamilton 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 Aspen Insurance and Hamilton Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aspen Insurance Holdings and Hamilton Insurance Group,, you can compare the effects of market volatilities on Aspen Insurance and Hamilton 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 Aspen Insurance with a short position of Hamilton Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and Hamilton Insurance.

Diversification Opportunities for Aspen Insurance and Hamilton Insurance

-0.31

Correlation Coefficient

Aspen Insurance  Hamilton Insurance

Very good diversification

The 3 months correlation between Aspen and Hamilton is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Hamilton Insurance Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Insurance Group, and Aspen Insurance 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 Aspen Insurance Holdings are associated (or correlated) with Hamilton Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Insurance Group, has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Hamilton Insurance go up and down completely randomly.

Pair Corralation between Aspen Insurance and Hamilton Insurance

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to under-perform the Hamilton Insurance. But the preferred stock apears to be less risky and, when comparing its historical volatility, Aspen Insurance Holdings is 3.41 times less risky than Hamilton Insurance. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Hamilton Insurance Group, is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,933  in Hamilton Insurance Group, on September 2, 2024 and sell it today you would lose (25.00) from holding Hamilton Insurance Group, or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aspen Insurance Holdings  vs.  Hamilton Insurance Group,

Aspen Insurance Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Aspen Insurance is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hamilton Insurance Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamilton Insurance Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hamilton Insurance is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aspen Insurance and Hamilton Insurance

The main advantage of trading using opposite Aspen Insurance and Hamilton Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Insurance position performs unexpectedly, Hamilton 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 Hamilton Insurance will offset losses from the drop in Hamilton Insurance's long position.

The idea behind Aspen Insurance Holdings and Hamilton Insurance Group, 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.