Correlation Between USWE SPORTS and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS 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 USWE SPORTS and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and The Hanover Insurance, you can compare the effects of market volatilities on USWE SPORTS 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 USWE SPORTS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Hanover Insurance.
Diversification Opportunities for USWE SPORTS and Hanover Insurance
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USWE and Hanover is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS i.e., USWE SPORTS and Hanover Insurance go up and down completely randomly.
Pair Corralation between USWE SPORTS and Hanover Insurance
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the Hanover Insurance. In addition to that, USWE SPORTS is 2.69 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 0.03 per unit of volatility. If you would invest 12,654 in The Hanover Insurance on October 29, 2024 and sell it today you would earn a total of 1,846 from holding The Hanover Insurance or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. The Hanover Insurance
Performance |
| Timeline |
| USWE SPORTS AB |
| Hanover Insurance |
USWE SPORTS and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Hanover Insurance
The main advantage of trading using opposite USWE SPORTS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS 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.| USWE SPORTS vs. CeoTronics AG | USWE SPORTS vs. PLAYTECH | USWE SPORTS vs. Jupiter Fund Management | USWE SPORTS vs. Gaming and Leisure |
| Hanover Insurance vs. TITANIUM TRANSPORTGROUP | Hanover Insurance vs. MARKET VECTR RETAIL | Hanover Insurance vs. SPARTAN STORES | Hanover Insurance vs. NTG Nordic Transport |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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