Correlation Between VIRG NATL and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both VIRG NATL 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 VIRG NATL and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIRG NATL BANKSH and The Hanover Insurance, you can compare the effects of market volatilities on VIRG NATL 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 VIRG NATL with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRG NATL and Hanover Insurance.
Diversification Opportunities for VIRG NATL and Hanover Insurance
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VIRG and Hanover is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and VIRG NATL 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 VIRG NATL BANKSH 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 VIRG NATL i.e., VIRG NATL and Hanover Insurance go up and down completely randomly.
Pair Corralation between VIRG NATL and Hanover Insurance
Assuming the 90 days horizon VIRG NATL BANKSH is expected to under-perform the Hanover Insurance. In addition to that, VIRG NATL is 2.14 times more volatile than The Hanover Insurance. It trades about -0.01 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.38 per unit of volatility. If you would invest 13,700 in The Hanover Insurance on September 1, 2024 and sell it today you would earn a total of 2,100 from holding The Hanover Insurance or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIRG NATL BANKSH vs. The Hanover Insurance
Performance |
| Timeline |
| VIRG NATL BANKSH |
| Hanover Insurance |
VIRG NATL and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIRG NATL and Hanover Insurance
The main advantage of trading using opposite VIRG NATL and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRG NATL 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.| VIRG NATL vs. Strategic Education | VIRG NATL vs. Verizon Communications | VIRG NATL vs. SK TELECOM TDADR | VIRG NATL vs. EEDUCATION ALBERT AB |
| Hanover Insurance vs. National Beverage Corp | Hanover Insurance vs. United Breweries Co | Hanover Insurance vs. Sabra Health Care | Hanover Insurance vs. Clearside Biomedical |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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