Correlation Between HANOVER INSURANCE and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and JAPAN AIRLINES 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 JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and JAPAN AIRLINES, you can compare the effects of market volatilities on HANOVER INSURANCE and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and JAPAN AIRLINES.
Diversification Opportunities for HANOVER INSURANCE and JAPAN AIRLINES
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and JAPAN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and JAPAN AIRLINES
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 1.18 times more return on investment than JAPAN AIRLINES. However, HANOVER INSURANCE is 1.18 times more volatile than JAPAN AIRLINES. It trades about 0.1 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.03 per unit of risk. If you would invest 13,119 in HANOVER INSURANCE on October 18, 2024 and sell it today you would earn a total of 1,581 from holding HANOVER INSURANCE or generate 12.05% 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. JAPAN AIRLINES
Performance |
| Timeline |
| HANOVER INSURANCE |
| JAPAN AIRLINES |
HANOVER INSURANCE and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and JAPAN AIRLINES
The main advantage of trading using opposite HANOVER INSURANCE and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| HANOVER INSURANCE vs. QINGCI GAMES INC | HANOVER INSURANCE vs. Motorcar Parts of | HANOVER INSURANCE vs. GameStop Corp | HANOVER INSURANCE vs. Zoom Video Communications |
| JAPAN AIRLINES vs. BRIT AMER TOBACCO | JAPAN AIRLINES vs. INSURANCE AUST GRP | JAPAN AIRLINES vs. ULTRA CLEAN HLDGS | JAPAN AIRLINES vs. HANOVER INSURANCE |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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