Correlation Between Chubb and Nasdaq

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

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

Diversification Opportunities for Chubb and Nasdaq

0.33

Correlation Coefficient

Chubb  Nasdaq

Weak diversification

The 3 months correlation between Chubb and Nasdaq is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Chubb i.e., Chubb and Nasdaq go up and down completely randomly.

Pair Corralation between Chubb and Nasdaq

Allowing for the 90-day total investment horizon Chubb is expected to generate 0.81 times more return on investment than Nasdaq. However, Chubb is 1.23 times less risky than Nasdaq. It trades about 0.21 of its potential returns per unit of risk. Nasdaq Inc is currently generating about -0.1 per unit of risk. If you would invest  27,393  in Chubb on December 4, 2024 and sell it today you would earn a total of  1,384  from holding Chubb or generate 5.05% return on investment over 90 days.

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

Chubb  vs.  Nasdaq Inc

Chubb

Risk-Adjusted Performance

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.

Nasdaq Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq 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 Nasdaq

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

The idea behind Chubb and Nasdaq Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.