Correlation Between Chubb and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Chubb and APx Acquisition 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 APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and APx Acquisition I, you can compare the effects of market volatilities on Chubb and APx Acquisition 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 APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and APx Acquisition.
Diversification Opportunities for Chubb and APx Acquisition
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chubb and APx is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Chubb i.e., Chubb and APx Acquisition go up and down completely randomly.
Pair Corralation between Chubb and APx Acquisition
Allowing for the 90-day total investment horizon Chubb is expected to generate 6.63 times more return on investment than APx Acquisition. However, Chubb is 6.63 times more volatile than APx Acquisition I. It trades about 0.06 of its potential returns per unit of risk. APx Acquisition I is currently generating about 0.17 per unit of risk. If you would invest 26,546 in Chubb on September 5, 2024 and sell it today you would earn a total of 2,079 from holding Chubb or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. APx Acquisition I
Performance |
| Timeline |
| Chubb |
| APx Acquisition I |
Chubb and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and APx Acquisition
The main advantage of trading using opposite Chubb and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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