Correlation Between SYSTEMAIR and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR 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 SYSTEMAIR and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and The Hanover Insurance, you can compare the effects of market volatilities on SYSTEMAIR 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 SYSTEMAIR with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Hanover Insurance.
Diversification Opportunities for SYSTEMAIR and Hanover Insurance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SYSTEMAIR and Hanover is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and SYSTEMAIR 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 SYSTEMAIR AB 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 SYSTEMAIR i.e., SYSTEMAIR and Hanover Insurance go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Hanover Insurance
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 2.01 times more return on investment than Hanover Insurance. However, SYSTEMAIR is 2.01 times more volatile than The Hanover Insurance. It trades about 0.05 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.05 per unit of risk. If you would invest 426.00 in SYSTEMAIR AB on October 11, 2024 and sell it today you would earn a total of 346.00 from holding SYSTEMAIR AB or generate 81.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. The Hanover Insurance
Performance |
| Timeline |
| SYSTEMAIR AB |
| Hanover Insurance |
SYSTEMAIR and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Hanover Insurance
The main advantage of trading using opposite SYSTEMAIR and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR 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.| SYSTEMAIR vs. Air Transport Services | SYSTEMAIR vs. GOLD ROAD RES | SYSTEMAIR vs. KINGBOARD CHEMICAL | SYSTEMAIR vs. AIR PRODCHEMICALS |
| Hanover Insurance vs. SYSTEMAIR AB | Hanover Insurance vs. Zoom Video Communications | Hanover Insurance vs. SEALED AIR | Hanover Insurance vs. Pentair 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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