Correlation Between Aspen Insurance and Saia

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

Diversification Opportunities for Aspen Insurance and Saia

0.32

Correlation Coefficient

Aspen Insurance  Saia

Weak diversification

The 3 months correlation between Aspen and Saia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc 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 Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Saia go up and down completely randomly.

Pair Corralation between Aspen Insurance and Saia

Assuming the 90 days trading horizon Aspen Insurance is expected to generate 3.0 times less return on investment than Saia. But when comparing it to its historical volatility, Aspen Insurance Holdings is 2.24 times less risky than Saia. It trades about 0.05 of its potential returns per unit of risk. Saia Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  30,497  in Saia Inc on August 31, 2024 and sell it today you would earn a total of  26,411  from holding Saia Inc or generate 86.6% return on investment over 90 days.

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

Aspen Insurance Holdings  vs.  Saia Inc

Aspen Insurance Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Insurance Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Saia Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Saia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Insurance and Saia

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

The idea behind Aspen Insurance Holdings and Saia Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.