Correlation Between Chubb and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Chubb and Aspen Insurance 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 Aspen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and Aspen Insurance Holdings, you can compare the effects of market volatilities on Chubb and Aspen Insurance 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 Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Aspen Insurance.
Diversification Opportunities for Chubb and Aspen Insurance
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chubb and Aspen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Aspen Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Insurance Holdings 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 Aspen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Insurance Holdings has no effect on the direction of Chubb i.e., Chubb and Aspen Insurance go up and down completely randomly.
Pair Corralation between Chubb and Aspen Insurance
Allowing for the 90-day total investment horizon Chubb is expected to under-perform the Aspen Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Chubb is 1.77 times less risky than Aspen Insurance. The stock trades about -0.06 of its potential returns per unit of risk. The Aspen Insurance Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,114 in Aspen Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Aspen Insurance Holdings or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Chubb |
| Aspen Insurance Holdings |
Chubb and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and Aspen Insurance
The main advantage of trading using opposite Chubb and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Aspen Insurance 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 Aspen Insurance will offset losses from the drop in Aspen Insurance's long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. AXIS Capital Holdings | Aspen Insurance vs. Athene Holding |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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