Correlation Between HCI and Chubb
Can any of the company-specific risk be diversified away by investing in both HCI and Chubb 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 HCI and Chubb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCI Group and Chubb, you can compare the effects of market volatilities on HCI and Chubb 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 HCI with a short position of Chubb. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Chubb.
Diversification Opportunities for HCI and Chubb
Modest diversification
The 3 months correlation between HCI and Chubb is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb and HCI 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 HCI Group are associated (or correlated) with Chubb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chubb has no effect on the direction of HCI i.e., HCI and Chubb go up and down completely randomly.
Pair Corralation between HCI and Chubb
Considering the 90-day investment horizon HCI Group is expected to generate 3.16 times more return on investment than Chubb. However, HCI is 3.16 times more volatile than Chubb. It trades about 0.24 of its potential returns per unit of risk. Chubb is currently generating about 0.35 per unit of risk. If you would invest 11,190 in HCI Group on September 3, 2024 and sell it today you would earn a total of 1,185 from holding HCI Group or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCI Group vs. Chubb
Performance |
| Timeline |
| HCI Group |
| Chubb |
HCI and Chubb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCI and Chubb
The main advantage of trading using opposite HCI and Chubb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCI position performs unexpectedly, Chubb 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 Chubb will offset losses from the drop in Chubb's long position.| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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