Correlation Between Chubb and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Chubb and Hanover 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 Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chubb and The Hanover Insurance, you can compare the effects of market volatilities on Chubb and Hanover 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chubb and Hanover Insurance.
Diversification Opportunities for Chubb and Hanover Insurance
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chubb and Hanover is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Chubb i.e., Chubb and Hanover Insurance go up and down completely randomly.
Pair Corralation between Chubb and Hanover Insurance
Allowing for the 90-day total investment horizon Chubb is expected to generate 0.87 times more return on investment than Hanover Insurance. However, Chubb is 1.14 times less risky than Hanover Insurance. It trades about 0.09 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.06 per unit of risk. If you would invest 19,232 in Chubb on August 24, 2024 and sell it today you would earn a total of 9,289 from holding Chubb or generate 48.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chubb vs. The Hanover Insurance
Performance |
| Timeline |
| Chubb |
| Hanover Insurance |
Chubb and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chubb and Hanover Insurance
The main advantage of trading using opposite Chubb and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Hanover 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 Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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