Correlation Between Aspen Insurance and ChampionX

Can any of the company-specific risk be diversified away by investing in both Aspen Insurance and ChampionX 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 ChampionX 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 ChampionX, you can compare the effects of market volatilities on Aspen Insurance and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Insurance and ChampionX.

Diversification Opportunities for Aspen Insurance and ChampionX

0.54

Correlation Coefficient

Aspen Insurance  ChampionX

Very weak diversification

The 3 months correlation between Aspen and ChampionX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and ChampionX go up and down completely randomly.

Pair Corralation between Aspen Insurance and ChampionX

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 0.69 times more return on investment than ChampionX. However, Aspen Insurance Holdings is 1.44 times less risky than ChampionX. It trades about 0.04 of its potential returns per unit of risk. ChampionX is currently generating about 0.01 per unit of risk. If you would invest  1,630  in Aspen Insurance Holdings on September 24, 2024 and sell it today you would earn a total of  435.00  from holding Aspen Insurance Holdings or generate 26.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Aspen Insurance Holdings  vs.  ChampionX

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aspen Insurance and ChampionX

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

The idea behind Aspen Insurance Holdings and ChampionX 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.