Correlation Between Chubb and Assurant

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

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

Diversification Opportunities for Chubb and Assurant

-0.05

Correlation Coefficient

Chubb  Assurant

Good diversification

The 3 months correlation between Chubb and Assurant is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Chubb i.e., Chubb and Assurant go up and down completely randomly.

Pair Corralation between Chubb and Assurant

Allowing for the 90-day total investment horizon Chubb is expected to generate 10.49 times less return on investment than Assurant. But when comparing it to its historical volatility, Chubb is 1.25 times less risky than Assurant. It trades about 0.02 of its potential returns per unit of risk. Assurant is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19,679  in Assurant on September 2, 2024 and sell it today you would earn a total of  3,031  from holding Assurant or generate 15.4% return on investment over 90 days.

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

Chubb  vs.  Assurant

Chubb

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Chubb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Assurant

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chubb and Assurant

The main advantage of trading using opposite Chubb and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.

The idea behind Chubb and Assurant 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.