Correlation Between Chubb and Hagerty

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

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

Diversification Opportunities for Chubb and Hagerty

-0.35

Correlation Coefficient

Chubb  Hagerty

Very good diversification

The 3 months correlation between Chubb and Hagerty is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Hagerty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hagerty 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 Hagerty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hagerty has no effect on the direction of Chubb i.e., Chubb and Hagerty go up and down completely randomly.

Pair Corralation between Chubb and Hagerty

Allowing for the 90-day total investment horizon Chubb is expected to under-perform the Hagerty. But the stock apears to be less risky and, when comparing its historical volatility, Chubb is 1.53 times less risky than Hagerty. The stock trades about -0.07 of its potential returns per unit of risk. The Hagerty is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,111  in Hagerty on September 14, 2024 and sell it today you would lose (7.50) from holding Hagerty or give up 0.68% of portfolio value over 90 days.

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

Chubb  vs.  Hagerty

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.

Hagerty

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chubb and Hagerty

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

The idea behind Chubb and Hagerty 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.