Correlation Between HANOVER INSURANCE and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on HANOVER INSURANCE and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and KIMBALL ELECTRONICS.
Diversification Opportunities for HANOVER INSURANCE and KIMBALL ELECTRONICS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HANOVER and KIMBALL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and KIMBALL ELECTRONICS
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.68 times more return on investment than KIMBALL ELECTRONICS. However, HANOVER INSURANCE is 1.48 times less risky than KIMBALL ELECTRONICS. It trades about 0.01 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.06 per unit of risk. If you would invest 14,600 in HANOVER INSURANCE on October 14, 2024 and sell it today you would earn a total of 0.00 from holding HANOVER INSURANCE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| HANOVER INSURANCE |
| KIMBALL ELECTRONICS |
HANOVER INSURANCE and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and KIMBALL ELECTRONICS
The main advantage of trading using opposite HANOVER INSURANCE and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS will offset losses from the drop in KIMBALL ELECTRONICS's long position.| HANOVER INSURANCE vs. Eurasia Mining Plc | HANOVER INSURANCE vs. MCEWEN MINING INC | HANOVER INSURANCE vs. Altair Engineering | HANOVER INSURANCE vs. Ryanair Holdings plc |
| KIMBALL ELECTRONICS vs. FEMALE HEALTH | KIMBALL ELECTRONICS vs. SBI Insurance Group | KIMBALL ELECTRONICS vs. HANOVER INSURANCE | KIMBALL ELECTRONICS vs. Garofalo Health Care |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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