Correlation Between HANOVER INSURANCE and Focus Home
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Focus Home 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 HANOVER INSURANCE and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Focus Home Interactive, you can compare the effects of market volatilities on HANOVER INSURANCE and Focus Home 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 HANOVER INSURANCE with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Focus Home.
Diversification Opportunities for HANOVER INSURANCE and Focus Home
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HANOVER and Focus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and HANOVER INSURANCE 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 HANOVER INSURANCE are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Focus Home go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Focus Home
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.58 times more return on investment than Focus Home. However, HANOVER INSURANCE is 1.73 times less risky than Focus Home. It trades about 0.11 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.27 per unit of risk. If you would invest 14,300 in HANOVER INSURANCE on November 8, 2024 and sell it today you would earn a total of 500.00 from holding HANOVER INSURANCE or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. Focus Home Interactive
Performance |
| Timeline |
| HANOVER INSURANCE |
| Focus Home Interactive |
HANOVER INSURANCE and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Focus Home
The main advantage of trading using opposite HANOVER INSURANCE and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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