Correlation Between Chubb and NI Holdings
Can any of the company-specific risk be diversified away by investing in both Chubb and NI Holdings 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 NI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and NI Holdings, you can compare the effects of market volatilities on Chubb and NI Holdings 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 NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and NI Holdings.
Diversification Opportunities for Chubb and NI Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chubb and NODK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Chubb i.e., Chubb and NI Holdings go up and down completely randomly.
Pair Corralation between Chubb and NI Holdings
Allowing for the 90-day total investment horizon Chubb is expected to under-perform the NI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Chubb is 1.44 times less risky than NI Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The NI Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,585 in NI Holdings on August 28, 2024 and sell it today you would earn a total of 32.00 from holding NI Holdings or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. NI Holdings
Performance |
| Timeline |
| Chubb |
| NI Holdings |
Chubb and NI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and NI Holdings
The main advantage of trading using opposite Chubb and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, NI Holdings 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 NI Holdings will offset losses from the drop in NI Holdings' long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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