Correlation Between Chubb and Admiral Group

Can any of the company-specific risk be diversified away by investing in both Chubb and Admiral Group 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 Admiral Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chubb and Admiral Group PLC, you can compare the effects of market volatilities on Chubb and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Admiral Group.

Diversification Opportunities for Chubb and Admiral Group

0.67

Correlation Coefficient

Chubb  Admiral Group

Poor diversification

The 3 months correlation between Chubb and Admiral is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of Chubb i.e., Chubb and Admiral Group go up and down completely randomly.

Pair Corralation between Chubb and Admiral Group

Allowing for the 90-day total investment horizon Chubb is expected to generate 3.39 times less return on investment than Admiral Group. But when comparing it to its historical volatility, Chubb is 1.47 times less risky than Admiral Group. It trades about 0.04 of its potential returns per unit of risk. Admiral Group PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,203  in Admiral Group PLC on January 31, 2024 and sell it today you would earn a total of  239.00  from holding Admiral Group PLC or generate 7.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chubb  vs.  Admiral Group PLC

Chubb

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Chubb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Admiral Group PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Admiral Group PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Admiral Group may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Chubb and Admiral Group

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

The idea behind Chubb and Admiral Group PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.