Correlation Between HANOVER INSURANCE and CSL
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and CSL 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 CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and CSL LTD SPONADR, you can compare the effects of market volatilities on HANOVER INSURANCE and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and CSL.
Diversification Opportunities for HANOVER INSURANCE and CSL
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HANOVER and CSL is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and CSL go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and CSL
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to under-perform the CSL. In addition to that, HANOVER INSURANCE is 1.21 times more volatile than CSL LTD SPONADR. It trades about -0.02 of its total potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.07 per unit of volatility. If you would invest 8,350 in CSL LTD SPONADR on October 11, 2024 and sell it today you would earn a total of 100.00 from holding CSL LTD SPONADR or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. CSL LTD SPONADR
Performance |
| Timeline |
| HANOVER INSURANCE |
| CSL LTD SPONADR |
HANOVER INSURANCE and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and CSL
The main advantage of trading using opposite HANOVER INSURANCE and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| HANOVER INSURANCE vs. Singapore Telecommunications Limited | HANOVER INSURANCE vs. China Communications Services | HANOVER INSURANCE vs. Charter Communications | HANOVER INSURANCE vs. De Grey Mining |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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