Correlation Between Aspen Insurance and Kemper

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

Diversification Opportunities for Aspen Insurance and Kemper

0.65

Correlation Coefficient

Aspen Insurance  Kemper

Poor diversification

The 3 months correlation between Aspen and Kemper is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Kemper go up and down completely randomly.

Pair Corralation between Aspen Insurance and Kemper

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 0.61 times more return on investment than Kemper. However, Aspen Insurance Holdings is 1.64 times less risky than Kemper. It trades about 0.1 of its potential returns per unit of risk. Kemper is currently generating about 0.06 per unit of risk. If you would invest  1,897  in Aspen Insurance Holdings on December 28, 2024 and sell it today you would earn a total of  111.00  from holding Aspen Insurance Holdings or generate 5.85% 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.  Kemper

Aspen Insurance Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Insurance Holdings are ranked lower than 8 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kemper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kemper is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aspen Insurance and Kemper

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

The idea behind Aspen Insurance Holdings and Kemper 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.