Correlation Between Admiral Group and Chubb
Can any of the company-specific risk be diversified away by investing in both Admiral Group and Chubb 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 Admiral Group and Chubb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group Plc and Chubb, you can compare the effects of market volatilities on Admiral Group and Chubb 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 Admiral Group with a short position of Chubb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Chubb.
Diversification Opportunities for Admiral Group and Chubb
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Admiral and Chubb is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group Plc and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb and Admiral Group 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 Admiral Group Plc are associated (or correlated) with Chubb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chubb has no effect on the direction of Admiral Group i.e., Admiral Group and Chubb go up and down completely randomly.
Pair Corralation between Admiral Group and Chubb
Assuming the 90 days horizon Admiral Group Plc is expected to generate 1.69 times more return on investment than Chubb. However, Admiral Group is 1.69 times more volatile than Chubb. It trades about 0.18 of its potential returns per unit of risk. Chubb is currently generating about 0.15 per unit of risk. If you would invest 3,226 in Admiral Group Plc on December 30, 2023 and sell it today you would earn a total of 182.00 from holding Admiral Group Plc or generate 5.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Admiral Group Plc vs. Chubb
Performance |
Timeline |
Admiral Group Plc |
Chubb |
Admiral Group and Chubb Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Admiral Group and Chubb
The main advantage of trading using opposite Admiral Group and Chubb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group position performs unexpectedly, Chubb 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 Chubb will offset losses from the drop in Chubb's long position.Admiral Group vs. Chubb | Admiral Group vs. The Travelers Companies | Admiral Group vs. Alcoa Corp | Admiral Group vs. Malaga Financial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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