Correlation Between Aspen Insurance and Sabre Insurance

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

Diversification Opportunities for Aspen Insurance and Sabre Insurance

0.0

Correlation Coefficient

Aspen Insurance  Sabre Insurance

Pay attention - limited upside

The 3 months correlation between Aspen and Sabre is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Sabre Insurance go up and down completely randomly.

Pair Corralation between Aspen Insurance and Sabre Insurance

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 6.88 times more return on investment than Sabre Insurance. However, Aspen Insurance is 6.88 times more volatile than Sabre Insurance Group. It trades about 0.04 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.09 per unit of risk. If you would invest  1,964  in Aspen Insurance Holdings on September 23, 2024 and sell it today you would earn a total of  101.00  from holding Aspen Insurance Holdings or generate 5.14% return on investment over 90 days.

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

Aspen Insurance Holdings  vs.  Sabre 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.

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aspen Insurance and Sabre Insurance

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

The idea behind Aspen Insurance Holdings and Sabre 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.