Correlation Between Aspen Insurance and Brighthouse Financial

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

Diversification Opportunities for Aspen Insurance and Brighthouse Financial

-0.48

Correlation Coefficient

Aspen Insurance  Brighthouse Financial

Very good diversification

The 3 months correlation between Aspen and Brighthouse is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Insurance Holdings and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Aspen Insurance i.e., Aspen Insurance and Brighthouse Financial go up and down completely randomly.

Pair Corralation between Aspen Insurance and Brighthouse Financial

Assuming the 90 days trading horizon Aspen Insurance Holdings is expected to generate 0.23 times more return on investment than Brighthouse Financial. However, Aspen Insurance Holdings is 4.4 times less risky than Brighthouse Financial. It trades about 0.23 of its potential returns per unit of risk. Brighthouse Financial is currently generating about -0.05 per unit of risk. If you would invest  1,878  in Aspen Insurance Holdings on May 7, 2025 and sell it today you would earn a total of  154.00  from holding Aspen Insurance Holdings or generate 8.2% return on investment over 90 days.

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

Aspen Insurance Holdings  vs.  Brighthouse Financial

Aspen Insurance Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Insurance Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Aspen Insurance may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Brighthouse Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brighthouse Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Preferred Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aspen Insurance and Brighthouse Financial

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

The idea behind Aspen Insurance Holdings and Brighthouse Financial 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.