Correlation Between HANOVER INSURANCE and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and JAPAN TOBACCO 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 TOBACCO 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 TOBACCO UNSPADR12, you can compare the effects of market volatilities on HANOVER INSURANCE and JAPAN TOBACCO 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 TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and JAPAN TOBACCO.
Diversification Opportunities for HANOVER INSURANCE and JAPAN TOBACCO
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between HANOVER and JAPAN is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and JAPAN TOBACCO
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to under-perform the JAPAN TOBACCO. In addition to that, HANOVER INSURANCE is 1.53 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about -0.2 of its total potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about -0.19 per unit of volatility. If you would invest 1,260 in JAPAN TOBACCO UNSPADR12 on September 25, 2024 and sell it today you would lose (40.00) from holding JAPAN TOBACCO UNSPADR12 or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| HANOVER INSURANCE |
| JAPAN TOBACCO UNSPADR12 |
HANOVER INSURANCE and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and JAPAN TOBACCO
The main advantage of trading using opposite HANOVER INSURANCE and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, JAPAN TOBACCO 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 TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Microsoft | HANOVER INSURANCE vs. Microsoft |
| JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. Philip Morris International | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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