Correlation Between Chubb and Hiscox

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

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

Diversification Opportunities for Chubb and Hiscox

0.18

Correlation Coefficient

Chubb  Hiscox

Average diversification

The 3 months correlation between Chubb and Hiscox is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox 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 Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Chubb i.e., Chubb and Hiscox go up and down completely randomly.

Pair Corralation between Chubb and Hiscox

Allowing for the 90-day total investment horizon Chubb is expected to generate 0.4 times more return on investment than Hiscox. However, Chubb is 2.53 times less risky than Hiscox. It trades about 0.06 of its potential returns per unit of risk. Hiscox is currently generating about 0.02 per unit of risk. If you would invest  20,257  in Chubb on October 10, 2024 and sell it today you would earn a total of  6,619  from holding Chubb or generate 32.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.37%
Values	Daily Returns

Chubb  vs.  Hiscox

Chubb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chubb has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Hiscox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiscox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hiscox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chubb and Hiscox

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

The idea behind Chubb and Hiscox 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.