Correlation Between Chubb and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Chubb and Donegal 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 Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and Donegal Group B, you can compare the effects of market volatilities on Chubb and Donegal 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 Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Donegal Group.
Diversification Opportunities for Chubb and Donegal Group
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chubb and Donegal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Donegal Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group B 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 Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group B has no effect on the direction of Chubb i.e., Chubb and Donegal Group go up and down completely randomly.
Pair Corralation between Chubb and Donegal Group
Allowing for the 90-day total investment horizon Chubb is expected to generate 6.69 times less return on investment than Donegal Group. But when comparing it to its historical volatility, Chubb is 2.95 times less risky than Donegal Group. It trades about 0.05 of its potential returns per unit of risk. Donegal Group B is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Donegal Group B on August 28, 2024 and sell it today you would earn a total of 218.00 from holding Donegal Group B or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.13% |
| Values | Daily Returns |
Chubb vs. Donegal Group B
Performance |
| Timeline |
| Chubb |
| Donegal Group B |
Chubb and Donegal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and Donegal Group
The main advantage of trading using opposite Chubb and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Donegal 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 Donegal Group will offset losses from the drop in Donegal Group's long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
| Donegal Group vs. Horace Mann Educators | Donegal Group vs. United Fire Group | Donegal Group vs. Donegal Group A | Donegal Group vs. Global Indemnity PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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