Correlation Between Gamma Communications and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and The Hanover Insurance, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Hanover Insurance.
Diversification Opportunities for Gamma Communications and Hanover Insurance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gamma and Hanover is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Gamma Communications 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 Gamma Communications plc 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 Gamma Communications i.e., Gamma Communications and Hanover Insurance go up and down completely randomly.
Pair Corralation between Gamma Communications and Hanover Insurance
Assuming the 90 days horizon Gamma Communications plc is expected to under-perform the Hanover Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Gamma Communications plc is 1.16 times less risky than Hanover Insurance. The stock trades about -0.01 of its potential returns per unit of risk. The The Hanover Insurance is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 13,800 in The Hanover Insurance on August 25, 2024 and sell it today you would earn a total of 1,400 from holding The Hanover Insurance or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. The Hanover Insurance
Performance |
| Timeline |
| Gamma Communications plc |
| Hanover Insurance |
Gamma Communications and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Hanover Insurance
The main advantage of trading using opposite Gamma Communications and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. T Mobile | Gamma Communications vs. ATT Inc | Gamma Communications vs. Deutsche Telekom AG | Gamma Communications vs. Nippon Telegraph and |
| Hanover Insurance vs. China Communications Services | Hanover Insurance vs. Enter Air SA | Hanover Insurance vs. Gamma Communications plc | Hanover Insurance vs. Singapore Telecommunications Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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