Correlation Between Siriuspoint and Aspen Insurance

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Can any of the company-specific risk be diversified away by investing in both Siriuspoint 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 Siriuspoint and Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siriuspoint and Aspen Insurance Holdings, you can compare the effects of market volatilities on Siriuspoint 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 Siriuspoint with a short position of Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siriuspoint and Aspen Insurance.

Diversification Opportunities for Siriuspoint and Aspen Insurance

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Siriuspoint and Aspen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint 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 Siriuspoint 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 Siriuspoint 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 Siriuspoint i.e., Siriuspoint and Aspen Insurance go up and down completely randomly.

Pair Corralation between Siriuspoint and Aspen Insurance

Given the investment horizon of 90 days Siriuspoint is expected to generate 1.01 times more return on investment than Aspen Insurance. However, Siriuspoint is 1.01 times more volatile than Aspen Insurance Holdings. It trades about 0.16 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about -0.1 per unit of risk. If you would invest  1,217  in Siriuspoint on December 30, 2023 and sell it today you would earn a total of  54.00  from holding Siriuspoint or generate 4.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Siriuspoint  vs.  Aspen Insurance Holdings

 Performance 
       Timeline  
Siriuspoint 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Aspen Insurance Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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.

Siriuspoint and Aspen Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Siriuspoint and Aspen Insurance

The main advantage of trading using opposite Siriuspoint and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint 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 Siriuspoint 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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