Correlation Between Admiral Group and Chubb

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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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Admiral Group Plc  vs.  Chubb

 Performance 
       Timeline  
Admiral Group Plc 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Admiral Group Plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Admiral Group may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Chubb 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Chubb sustained solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Admiral Group Plc and Chubb 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 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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