Correlation Between Chubb and Kinsale Capital
Can any of the company-specific risk be diversified away by investing in both Chubb and Kinsale Capital 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 Kinsale Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and Kinsale Capital Group, you can compare the effects of market volatilities on Chubb and Kinsale Capital 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 Kinsale Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Kinsale Capital.
Diversification Opportunities for Chubb and Kinsale Capital
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chubb and Kinsale is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group 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 Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Chubb i.e., Chubb and Kinsale Capital go up and down completely randomly.
Pair Corralation between Chubb and Kinsale Capital
Allowing for the 90-day total investment horizon Chubb is expected to under-perform the Kinsale Capital. But the stock apears to be less risky and, when comparing its historical volatility, Chubb is 2.11 times less risky than Kinsale Capital. The stock trades about -0.09 of its potential returns per unit of risk. The Kinsale Capital Group is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 43,827 in Kinsale Capital Group on August 27, 2024 and sell it today you would earn a total of 6,042 from holding Kinsale Capital Group or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. Kinsale Capital Group
Performance |
| Timeline |
| Chubb |
| Kinsale Capital Group |
Chubb and Kinsale Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and Kinsale Capital
The main advantage of trading using opposite Chubb and Kinsale Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Kinsale Capital 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 Kinsale Capital will offset losses from the drop in Kinsale Capital's long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
| Kinsale Capital vs. Selective Insurance Group | Kinsale Capital vs. Horace Mann Educators | Kinsale Capital vs. Kemper | Kinsale Capital vs. ProAssurance |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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