Correlation Between New Residential and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both New Residential and HANOVER INSURANCE 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 New Residential and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and HANOVER INSURANCE, you can compare the effects of market volatilities on New Residential and HANOVER INSURANCE 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 New Residential with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and HANOVER INSURANCE.
Diversification Opportunities for New Residential and HANOVER INSURANCE
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and HANOVER is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and New Residential 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 New Residential Investment are associated (or correlated) with HANOVER INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANOVER INSURANCE has no effect on the direction of New Residential i.e., New Residential and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between New Residential and HANOVER INSURANCE
Assuming the 90 days trading horizon New Residential is expected to generate 3.39 times less return on investment than HANOVER INSURANCE. But when comparing it to its historical volatility, New Residential Investment is 1.2 times less risky than HANOVER INSURANCE. It trades about 0.06 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,536 in HANOVER INSURANCE on September 2, 2024 and sell it today you would earn a total of 3,664 from holding HANOVER INSURANCE or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. HANOVER INSURANCE
Performance |
| Timeline |
| New Residential Inve |
| HANOVER INSURANCE |
New Residential and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and HANOVER INSURANCE
The main advantage of trading using opposite New Residential and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, HANOVER INSURANCE 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 HANOVER INSURANCE will offset losses from the drop in HANOVER INSURANCE's long position.| New Residential vs. The Bank of | New Residential vs. Allianz SE | New Residential vs. Sixt SE | New Residential vs. China Construction Bank |
| HANOVER INSURANCE vs. SIVERS SEMICONDUCTORS AB | HANOVER INSURANCE vs. Darden Restaurants | HANOVER INSURANCE vs. Reliance Steel Aluminum | HANOVER INSURANCE vs. Q2M Managementberatung AG |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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