Correlation Between HANOVER INSURANCE and AES
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and AES 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 AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and The AES, you can compare the effects of market volatilities on HANOVER INSURANCE and AES 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 AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and AES.
Diversification Opportunities for HANOVER INSURANCE and AES
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HANOVER and AES is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES 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 AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and AES go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and AES
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.63 times more return on investment than AES. However, HANOVER INSURANCE is 1.59 times less risky than AES. It trades about 0.04 of its potential returns per unit of risk. The AES is currently generating about -0.05 per unit of risk. If you would invest 12,371 in HANOVER INSURANCE on September 3, 2024 and sell it today you would earn a total of 2,829 from holding HANOVER INSURANCE or generate 22.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. The AES
Performance |
| Timeline |
| HANOVER INSURANCE |
| AES |
HANOVER INSURANCE and AES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and AES
The main advantage of trading using opposite HANOVER INSURANCE and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.| HANOVER INSURANCE vs. TOTAL GABON | HANOVER INSURANCE vs. Walgreens Boots Alliance | HANOVER INSURANCE vs. Peak Resources Limited |
| AES vs. XLMedia PLC | AES vs. PARKEN Sport Entertainment | AES vs. HANOVER INSURANCE | AES vs. Safety Insurance Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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