Correlation Between Guardian Pharmacy and Aspen Insurance

Can any of the company-specific risk be diversified away by investing in both Guardian Pharmacy and Aspen Insurance 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 Guardian Pharmacy and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardian Pharmacy Services, and Aspen Insurance Holdings, you can compare the effects of market volatilities on Guardian Pharmacy and Aspen Insurance 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 Guardian Pharmacy with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Pharmacy and Aspen Insurance.

Diversification Opportunities for Guardian Pharmacy and Aspen Insurance

0.44

Correlation Coefficient

Guardian Pharmacy  Aspen Insurance

Very weak diversification

The 3 months correlation between Guardian and Aspen is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Pharmacy Services, and Aspen Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Insurance Holdings and Guardian Pharmacy 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 Guardian Pharmacy Services, are associated (or correlated) with Aspen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Insurance Holdings has no effect on the direction of Guardian Pharmacy i.e., Guardian Pharmacy and Aspen Insurance go up and down completely randomly.

Pair Corralation between Guardian Pharmacy and Aspen Insurance

Given the investment horizon of 90 days Guardian Pharmacy Services, is expected to generate 3.13 times more return on investment than Aspen Insurance. However, Guardian Pharmacy is 3.13 times more volatile than Aspen Insurance Holdings. It trades about 0.01 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.01 per unit of risk. If you would invest  2,028  in Guardian Pharmacy Services, on December 29, 2024 and sell it today you would lose (13.00) from holding Guardian Pharmacy Services, or give up 0.64% of portfolio value over 90 days.

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

Guardian Pharmacy Services,  vs.  Aspen Insurance Holdings

Guardian Pharmacy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian Pharmacy Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Guardian Pharmacy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Guardian Pharmacy and Aspen Insurance

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

The idea behind Guardian Pharmacy Services, and Aspen Insurance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.