Correlation Between Summit Materials and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Aspen Insurance Holdings, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Aspen Insurance.
Diversification Opportunities for Summit Materials and Aspen Insurance
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Aspen is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Aspen Insurance go up and down completely randomly.
Pair Corralation between Summit Materials and Aspen Insurance
Considering the 90-day investment horizon Summit Materials is expected to generate 0.43 times more return on investment than Aspen Insurance. However, Summit Materials is 2.33 times less risky than Aspen Insurance. It trades about -0.23 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about -0.12 per unit of risk. If you would invest 5,166 in Summit Materials on September 23, 2024 and sell it today you would lose (116.00) from holding Summit Materials or give up 2.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Materials vs. Aspen Insurance Holdings
Performance |
Timeline |
Summit Materials |
Aspen Insurance Holdings |
Summit Materials and Aspen Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Aspen Insurance
The main advantage of trading using opposite Summit Materials and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.Summit Materials vs. Vulcan Materials | Summit Materials vs. CRH PLC ADR | Summit Materials vs. Cemex SAB de | Summit Materials vs. Martin Marietta Materials |
Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Selective Insurance Group | Aspen Insurance vs. The Allstate | Aspen Insurance vs. AmTrust Financial Services |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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