Correlation Between Aegon NV and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Aegon NV 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 Aegon NV and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegon NV ADR and The Hanover Insurance, you can compare the effects of market volatilities on Aegon NV 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 Aegon NV with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Hanover Insurance.
Diversification Opportunities for Aegon NV and Hanover Insurance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegon and Hanover is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Aegon NV 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 Aegon NV ADR 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 Aegon NV i.e., Aegon NV and Hanover Insurance go up and down completely randomly.
Pair Corralation between Aegon NV and Hanover Insurance
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.58 times more return on investment than Hanover Insurance. However, Aegon NV ADR is 1.74 times less risky than Hanover Insurance. It trades about 0.22 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.12 per unit of risk. If you would invest 637.00 in Aegon NV ADR on November 18, 2024 and sell it today you would earn a total of 29.00 from holding Aegon NV ADR or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. The Hanover Insurance
Performance |
| Timeline |
| Aegon NV ADR |
| Hanover Insurance |
Aegon NV and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Hanover Insurance
The main advantage of trading using opposite Aegon NV and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV 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.| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. International General Insurance | Aegon NV vs. Enstar Group Limited |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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