Correlation Between HANOVER INSURANCE and SOS
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and SOS 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 SOS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and SOS LTD A, you can compare the effects of market volatilities on HANOVER INSURANCE and SOS 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 SOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and SOS.
Diversification Opportunities for HANOVER INSURANCE and SOS
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HANOVER and SOS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A 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 SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and SOS go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and SOS
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.06 times more return on investment than SOS. However, HANOVER INSURANCE is 16.15 times less risky than SOS. It trades about -0.07 of its potential returns per unit of risk. SOS LTD A is currently generating about -0.01 per unit of risk. If you would invest 14,908 in HANOVER INSURANCE on September 16, 2024 and sell it today you would lose (298.00) from holding HANOVER INSURANCE or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. SOS LTD A
Performance |
| Timeline |
| HANOVER INSURANCE |
| SOS LTD A |
HANOVER INSURANCE and SOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and SOS
The main advantage of trading using opposite HANOVER INSURANCE and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, SOS 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 SOS will offset losses from the drop in SOS's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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