Correlation Between Food Life and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Food Life 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 Food Life and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and The Hanover Insurance, you can compare the effects of market volatilities on Food Life 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 Food Life with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Hanover Insurance.
Diversification Opportunities for Food Life and Hanover Insurance
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Food and Hanover is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Food Life 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 Food Life Companies 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 Food Life i.e., Food Life and Hanover Insurance go up and down completely randomly.
Pair Corralation between Food Life and Hanover Insurance
Assuming the 90 days horizon Food Life is expected to generate 1.27 times less return on investment than Hanover Insurance. In addition to that, Food Life is 1.61 times more volatile than The Hanover Insurance. It trades about 0.02 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of volatility. If you would invest 12,275 in The Hanover Insurance on September 3, 2024 and sell it today you would earn a total of 3,525 from holding The Hanover Insurance or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. The Hanover Insurance
Performance |
| Timeline |
| Food Life Companies |
| Hanover Insurance |
Food Life and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Hanover Insurance
The main advantage of trading using opposite Food Life and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life 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.| Food Life vs. McDonalds | Food Life vs. Chipotle Mexican Grill | Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings |
| Hanover Insurance vs. Datadog | Hanover Insurance vs. CARSALESCOM | Hanover Insurance vs. DATANG INTL POW | Hanover Insurance vs. Grupo Carso SAB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |