Correlation Between WisdomTree Investments and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments 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 WisdomTree Investments and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and The Hanover Insurance, you can compare the effects of market volatilities on WisdomTree Investments 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 WisdomTree Investments with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and Hanover Insurance.
Diversification Opportunities for WisdomTree Investments and Hanover Insurance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Hanover is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments i.e., WisdomTree Investments and Hanover Insurance go up and down completely randomly.
Pair Corralation between WisdomTree Investments and Hanover Insurance
Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.94 times more return on investment than Hanover Insurance. However, WisdomTree Investments is 1.94 times more volatile than The Hanover Insurance. It trades about 0.33 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.37 per unit of risk. If you would invest 985.00 in WisdomTree Investments on August 29, 2024 and sell it today you would earn a total of 247.00 from holding WisdomTree Investments or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. The Hanover Insurance
Performance |
| Timeline |
| WisdomTree Investments |
| Hanover Insurance |
WisdomTree Investments and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and Hanover Insurance
The main advantage of trading using opposite WisdomTree Investments and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments 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.| WisdomTree Investments vs. BlackRock | WisdomTree Investments vs. Ares Management Corp | WisdomTree Investments vs. Northern Trust |
| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Beazley PLC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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