Correlation Between Aspen Insurance and Entheon Biomedical

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

Diversification Opportunities for Aspen Insurance and Entheon Biomedical

0.05

Correlation Coefficient

Aspen Insurance  Entheon Biomedical

Significant diversification

The 3 months correlation between Aspen and Entheon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Entheon Biomedical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entheon Biomedical Corp 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 Entheon Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entheon Biomedical Corp has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Entheon Biomedical go up and down completely randomly.

Pair Corralation between Aspen Insurance and Entheon Biomedical

Assuming the 90 days trading horizon Aspen Insurance is expected to generate 74.22 times less return on investment than Entheon Biomedical. But when comparing it to its historical volatility, Aspen Insurance Holdings is 19.15 times less risky than Entheon Biomedical. It trades about 0.02 of its potential returns per unit of risk. Entheon Biomedical Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Entheon Biomedical Corp on September 26, 2024 and sell it today you would lose (5.00) from holding Entheon Biomedical Corp or give up 29.41% of portfolio value over 90 days.

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

Aspen Insurance Holdings  vs.  Entheon Biomedical Corp

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.

Entheon Biomedical Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entheon Biomedical Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Entheon Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Insurance and Entheon Biomedical

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

The idea behind Aspen Insurance Holdings and Entheon Biomedical Corp 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.