Correlation Between Aflac Incorporated and Chubb

Can any of the company-specific risk be diversified away by investing in both Aflac Incorporated 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 Aflac Incorporated and Chubb into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aflac Incorporated and Chubb, you can compare the effects of market volatilities on Aflac Incorporated 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 Aflac Incorporated with a short position of Chubb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aflac Incorporated and Chubb.

Diversification Opportunities for Aflac Incorporated and Chubb

0.75

Correlation Coefficient

Aflac Incorporated  Chubb

Poor diversification

The 3 months correlation between Aflac and Chubb is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb and Aflac Incorporated 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 Aflac Incorporated 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 Aflac Incorporated i.e., Aflac Incorporated and Chubb go up and down completely randomly.

Pair Corralation between Aflac Incorporated and Chubb

Considering the 90-day investment horizon Aflac Incorporated is expected to generate 0.94 times more return on investment than Chubb. However, Aflac Incorporated is 1.06 times less risky than Chubb. It trades about 0.1 of its potential returns per unit of risk. Chubb is currently generating about 0.09 per unit of risk. If you would invest  10,280  in Aflac Incorporated on December 27, 2024 and sell it today you would earn a total of  764.00  from holding Aflac Incorporated or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aflac Incorporated  vs.  Chubb

Aflac Incorporated

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Aflac Incorporated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Chubb

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Chubb may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aflac Incorporated and Chubb

The main advantage of trading using opposite Aflac Incorporated and Chubb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aflac Incorporated 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.

The idea behind Aflac Incorporated and Chubb pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.