Dynamic Hedge blogs about correlation, relative value and quantitative analysis at http://www.dynamichedge.com
The trade here is to be short $ACE (ACE Limited) and long $CB (The Chubb Corporation). Pull this spread up on your charting package and look at the long term moves. The spread could easily move to the $5.50 mark before reverting to the mean. The good news is that both stocks are through their earnings dates. If you believe in a bounce of the overall market, short less of $ACE or buy more $CB.
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