Correlation Between Chubb and Enstar Group

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

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

Diversification Opportunities for Chubb and Enstar Group

0.54

Correlation Coefficient

Chubb  Enstar Group

Very weak diversification

The 3 months correlation between Chubb and Enstar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Enstar Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group 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 Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group has no effect on the direction of Chubb i.e., Chubb and Enstar Group go up and down completely randomly.

Pair Corralation between Chubb and Enstar Group

Allowing for the 90-day total investment horizon Chubb is expected to generate 1.1 times more return on investment than Enstar Group. However, Chubb is 1.1 times more volatile than Enstar Group Ltd. It trades about 0.11 of its potential returns per unit of risk. Enstar Group Ltd is currently generating about 0.08 per unit of risk. If you would invest  27,454  in Chubb on December 28, 2024 and sell it today you would earn a total of  2,382  from holding Chubb or generate 8.68% return on investment over 90 days.

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

Chubb  vs.  Enstar Group Ltd

Chubb

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Chubb may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Enstar Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Enstar Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Chubb and Enstar Group

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

The idea behind Chubb and Enstar Group Ltd 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.