Correlation Between Motorcar Parts and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Motorcar Parts 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 Motorcar Parts and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motorcar Parts of and HANOVER INSURANCE, you can compare the effects of market volatilities on Motorcar Parts 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 Motorcar Parts with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorcar Parts and HANOVER INSURANCE.
Diversification Opportunities for Motorcar Parts and HANOVER INSURANCE
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Motorcar and HANOVER is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Motorcar Parts of and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Motorcar Parts 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 Motorcar Parts of 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 Motorcar Parts i.e., Motorcar Parts and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Motorcar Parts and HANOVER INSURANCE
Assuming the 90 days horizon Motorcar Parts of is expected to under-perform the HANOVER INSURANCE. In addition to that, Motorcar Parts is 2.28 times more volatile than HANOVER INSURANCE. It trades about -0.22 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about -0.04 per unit of volatility. If you would invest 14,600 in HANOVER INSURANCE on October 30, 2024 and sell it today you would lose (200.00) from holding HANOVER INSURANCE or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motorcar Parts of vs. HANOVER INSURANCE
Performance |
| Timeline |
| Motorcar Parts |
| HANOVER INSURANCE |
Motorcar Parts and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motorcar Parts and HANOVER INSURANCE
The main advantage of trading using opposite Motorcar Parts and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorcar Parts 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.| Motorcar Parts vs. Transport International Holdings | Motorcar Parts vs. BII Railway Transportation | Motorcar Parts vs. PARKEN Sport Entertainment | Motorcar Parts vs. Ultra Clean Holdings |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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