Correlation Between Chubb and Sun Life
Can any of the company-specific risk be diversified away by investing in both Chubb and Sun Life 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 Chubb and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and Sun Life Financial, you can compare the effects of market volatilities on Chubb and Sun Life 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 Chubb with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Sun Life.
Diversification Opportunities for Chubb and Sun Life
Poor diversification
The 3 months correlation between Chubb and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Chubb 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 Chubb are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Chubb i.e., Chubb and Sun Life go up and down completely randomly.
Pair Corralation between Chubb and Sun Life
Allowing for the 90-day total investment horizon Chubb is expected to generate 1.17 times more return on investment than Sun Life. However, Chubb is 1.17 times more volatile than Sun Life Financial. It trades about -0.02 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.12 per unit of risk. If you would invest 25,416 in Chubb on February 8, 2024 and sell it today you would lose (221.00) from holding Chubb or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. Sun Life Financial
Performance |
| Timeline |
| Chubb |
| Sun Life Financial |
Chubb and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and Sun Life
The main advantage of trading using opposite Chubb and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
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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