Correlation Between HANOVER INSURANCE and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Plastic Omnium 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 Plastic Omnium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Plastic Omnium, you can compare the effects of market volatilities on HANOVER INSURANCE and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Plastic Omnium.
Diversification Opportunities for HANOVER INSURANCE and Plastic Omnium
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between HANOVER and Plastic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Plastic Omnium go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Plastic Omnium
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 44.56 times less return on investment than Plastic Omnium. But when comparing it to its historical volatility, HANOVER INSURANCE is 1.53 times less risky than Plastic Omnium. It trades about 0.0 of its potential returns per unit of risk. Plastic Omnium is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Plastic Omnium on October 13, 2024 and sell it today you would earn a total of 23.00 from holding Plastic Omnium or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
HANOVER INSURANCE vs. Plastic Omnium
Performance |
| Timeline |
| HANOVER INSURANCE |
| Plastic Omnium |
HANOVER INSURANCE and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Plastic Omnium
The main advantage of trading using opposite HANOVER INSURANCE and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium'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 |
| Plastic Omnium vs. PLAYMATES TOYS | Plastic Omnium vs. Addus HomeCare | Plastic Omnium vs. alstria office REIT AG | Plastic Omnium vs. ADDUS HOMECARE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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