Correlation Between HANOVER INSURANCE and BOVIS HOMES
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and BOVIS HOMES 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 BOVIS HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and BOVIS HOMES GROUP, you can compare the effects of market volatilities on HANOVER INSURANCE and BOVIS HOMES 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 BOVIS HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and BOVIS HOMES.
Diversification Opportunities for HANOVER INSURANCE and BOVIS HOMES
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HANOVER and BOVIS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and BOVIS HOMES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOVIS HOMES GROUP 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 BOVIS HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOVIS HOMES GROUP has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and BOVIS HOMES go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and BOVIS HOMES
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.87 times more return on investment than BOVIS HOMES. However, HANOVER INSURANCE is 1.14 times less risky than BOVIS HOMES. It trades about -0.06 of its potential returns per unit of risk. BOVIS HOMES GROUP is currently generating about -0.15 per unit of risk. If you would invest 15,513 in HANOVER INSURANCE on December 16, 2024 and sell it today you would lose (413.00) from holding HANOVER INSURANCE or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. BOVIS HOMES GROUP
Performance |
| Timeline |
| HANOVER INSURANCE |
| BOVIS HOMES GROUP |
HANOVER INSURANCE and BOVIS HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and BOVIS HOMES
The main advantage of trading using opposite HANOVER INSURANCE and BOVIS HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, BOVIS HOMES 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 BOVIS HOMES will offset losses from the drop in BOVIS HOMES's long position.| HANOVER INSURANCE vs. International Consolidated Airlines | ||
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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