Correlation Between Peoples Educational and Aspen Insurance

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

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

Diversification Opportunities for Peoples Educational and Aspen Insurance

0.4

Correlation Coefficient

Peoples Educational  Aspen Insurance

Very weak diversification

The 3 months correlation between Peoples and Aspen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Educational Holdings 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 Peoples Educational 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 Peoples Educational Holdings 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 Peoples Educational i.e., Peoples Educational and Aspen Insurance go up and down completely randomly.

Pair Corralation between Peoples Educational and Aspen Insurance

Given the investment horizon of 90 days Peoples Educational Holdings is expected to under-perform the Aspen Insurance. In addition to that, Peoples Educational is 5.42 times more volatile than Aspen Insurance Holdings. It trades about -0.13 of its total potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.02 per unit of volatility. If you would invest  2,036  in Aspen Insurance Holdings on November 20, 2024 and sell it today you would earn a total of  26.00  from holding Aspen Insurance Holdings or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Peoples Educational Holdings  vs.  Aspen Insurance Holdings

Peoples Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Educational Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Aspen Insurance Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Insurance Holdings are ranked lower than 1 (%) 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.

Pair Trading with Peoples Educational and Aspen Insurance

The main advantage of trading using opposite Peoples Educational and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Educational 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 Peoples Educational Holdings 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.