Correlation Between POSBO UNSPADRS/20YC1 and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSBO UNSPADRS20YC1 and The Hanover Insurance, you can compare the effects of market volatilities on POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSBO UNSPADRS/20YC1 and Hanover Insurance.
Diversification Opportunities for POSBO UNSPADRS/20YC1 and Hanover Insurance
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between POSBO and Hanover is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding POSBO UNSPADRS20YC1 and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS20YC1 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 POSBO UNSPADRS/20YC1 i.e., POSBO UNSPADRS/20YC1 and Hanover Insurance go up and down completely randomly.
Pair Corralation between POSBO UNSPADRS/20YC1 and Hanover Insurance
Assuming the 90 days trading horizon POSBO UNSPADRS/20YC1 is expected to generate 4.41 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, POSBO UNSPADRS20YC1 is 1.33 times less risky than Hanover Insurance. It trades about 0.1 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 13,400 in The Hanover Insurance on September 5, 2024 and sell it today you would earn a total of 1,900 from holding The Hanover Insurance or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSBO UNSPADRS20YC1 vs. The Hanover Insurance
Performance |
| Timeline |
| POSBO UNSPADRS/20YC1 |
| Hanover Insurance |
POSBO UNSPADRS/20YC1 and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSBO UNSPADRS/20YC1 and Hanover Insurance
The main advantage of trading using opposite POSBO UNSPADRS/20YC1 and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSBO UNSPADRS/20YC1 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.| POSBO UNSPADRS/20YC1 vs. The Hanover Insurance | POSBO UNSPADRS/20YC1 vs. Singapore Reinsurance | POSBO UNSPADRS/20YC1 vs. X FAB Silicon Foundries | POSBO UNSPADRS/20YC1 vs. VIVA WINE GROUP |
| Hanover Insurance vs. Loews Corp | Hanover Insurance vs. Superior Plus Corp | Hanover Insurance vs. NMI Holdings | Hanover Insurance vs. Origin Agritech |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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