Correlation Between Chubb and Netcapital

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

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

Diversification Opportunities for Chubb and Netcapital

-0.23

Correlation Coefficient

Chubb  Netcapital

Very good diversification

The 3 months correlation between Chubb and Netcapital is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Chubb i.e., Chubb and Netcapital go up and down completely randomly.

Pair Corralation between Chubb and Netcapital

Allowing for the 90-day total investment horizon Chubb is expected to under-perform the Netcapital. But the stock apears to be less risky and, when comparing its historical volatility, Chubb is 26.29 times less risky than Netcapital. The stock trades about -0.1 of its potential returns per unit of risk. The Netcapital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.59  in Netcapital on May 7, 2025 and sell it today you would earn a total of  0.91  from holding Netcapital or generate 35.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

Chubb  vs.  Netcapital

Chubb

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chubb has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Netcapital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netcapital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Netcapital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chubb and Netcapital

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

The idea behind Chubb and Netcapital 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.