Correlation Between HANOVER INSURANCE and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and CompuGroup Medical 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 CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and CompuGroup Medical SE, you can compare the effects of market volatilities on HANOVER INSURANCE and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and CompuGroup Medical.
Diversification Opportunities for HANOVER INSURANCE and CompuGroup Medical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and CompuGroup is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and CompuGroup Medical go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and CompuGroup Medical
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 26.35 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, HANOVER INSURANCE is 5.88 times less risky than CompuGroup Medical. It trades about 0.05 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,530 in CompuGroup Medical SE on September 12, 2024 and sell it today you would earn a total of 640.00 from holding CompuGroup Medical SE or generate 41.83% 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. CompuGroup Medical SE
Performance |
| Timeline |
| HANOVER INSURANCE |
| CompuGroup Medical |
HANOVER INSURANCE and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and CompuGroup Medical
The main advantage of trading using opposite HANOVER INSURANCE and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
| CompuGroup Medical vs. Evolent Health | CompuGroup Medical vs. Compugroup Medical SE | CompuGroup Medical vs. Superior Plus Corp | CompuGroup Medical vs. NMI Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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