Correlation Between Aspen Insurance and Athene Holding

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

Diversification Opportunities for Aspen Insurance and Athene Holding

0.7

Correlation Coefficient

Aspen Insurance  Athene Holding

Poor diversification

The 3 months correlation between Aspen and Athene is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Athene Holding go up and down completely randomly.

Pair Corralation between Aspen Insurance and Athene Holding

Assuming the 90 days trading horizon Aspen Insurance is expected to generate 1.64 times less return on investment than Athene Holding. But when comparing it to its historical volatility, Aspen Insurance Holdings is 1.26 times less risky than Athene Holding. It trades about 0.01 of its potential returns per unit of risk. Athene Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,962  in Athene Holding on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Athene Holding or generate 0.76% return on investment over 90 days.

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

Aspen Insurance Holdings  vs.  Athene Holding

Aspen Insurance Holdings

Risk-Adjusted Performance

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.

Athene Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Athene Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Athene Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aspen Insurance and Athene Holding

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

The idea behind Aspen Insurance Holdings and Athene Holding 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.