Correlation Between Universal Insurance and Chubb
Can any of the company-specific risk be diversified away by investing in both Universal Insurance 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 Universal Insurance and Chubb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Chubb, you can compare the effects of market volatilities on Universal Insurance 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 Universal Insurance with a short position of Chubb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Chubb.
Diversification Opportunities for Universal Insurance and Chubb
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Universal and Chubb is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb and Universal Insurance 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 Universal Insurance Holdings 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 Universal Insurance i.e., Universal Insurance and Chubb go up and down completely randomly.
Pair Corralation between Universal Insurance and Chubb
Considering the 90-day investment horizon Universal Insurance Holdings is expected to under-perform the Chubb. In addition to that, Universal Insurance is 1.3 times more volatile than Chubb. It trades about -0.13 of its total potential returns per unit of risk. Chubb is currently generating about -0.11 per unit of volatility. If you would invest 28,289 in Chubb on September 13, 2024 and sell it today you would lose (609.00) from holding Chubb or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Chubb
Performance |
| Timeline |
| Universal Insurance |
| Chubb |
Universal Insurance and Chubb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Chubb
The main advantage of trading using opposite Universal Insurance and Chubb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance 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.| Universal Insurance vs. Chubb | Universal Insurance vs. W R Berkley | Universal Insurance vs. The Allstate | Universal Insurance vs. Markel |
| Chubb vs. Cincinnati Financial | Chubb vs. Aflac Incorporated | Chubb vs. Dover | Chubb vs. Franklin Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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