Correlation Between Aspen Insurance and Oxbridge

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

Diversification Opportunities for Aspen Insurance and Oxbridge

-0.71

Correlation Coefficient

Aspen Insurance  Oxbridge

Pay attention - limited upside

The 3 months correlation between Aspen and Oxbridge is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Oxbridge Re Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxbridge Re Holdings 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 Oxbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxbridge Re Holdings has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Oxbridge go up and down completely randomly.

Pair Corralation between Aspen Insurance and Oxbridge

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to under-perform the Oxbridge. But the preferred stock apears to be less risky and, when comparing its historical volatility, Aspen Insurance Holdings is 8.52 times less risky than Oxbridge. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Oxbridge Re Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Oxbridge Re Holdings on September 14, 2024 and sell it today you would earn a total of  154.00  from holding Oxbridge Re Holdings or generate 66.96% return on investment over 90 days.

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

Aspen Insurance Holdings  vs.  Oxbridge Re Holdings

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.

Oxbridge Re Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxbridge Re Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Oxbridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Insurance and Oxbridge

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

The idea behind Aspen Insurance Holdings and Oxbridge Re Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.