Correlation Between HANOVER INSURANCE and Albemarle
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Albemarle 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 Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Albemarle, you can compare the effects of market volatilities on HANOVER INSURANCE and Albemarle 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 Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Albemarle.
Diversification Opportunities for HANOVER INSURANCE and Albemarle
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and Albemarle is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Albemarle go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Albemarle
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.41 times more return on investment than Albemarle. However, HANOVER INSURANCE is 2.43 times less risky than Albemarle. It trades about 0.04 of its potential returns per unit of risk. Albemarle is currently generating about -0.04 per unit of risk. If you would invest 11,144 in HANOVER INSURANCE on October 13, 2024 and sell it today you would earn a total of 3,456 from holding HANOVER INSURANCE or generate 31.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. Albemarle
Performance |
| Timeline |
| HANOVER INSURANCE |
| Albemarle |
HANOVER INSURANCE and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Albemarle
The main advantage of trading using opposite HANOVER INSURANCE and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle'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 |
| Albemarle vs. REVO INSURANCE SPA | Albemarle vs. GALENA MINING LTD | Albemarle vs. HANOVER INSURANCE | Albemarle vs. Zurich 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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