Correlation Between HANOVER INSURANCE and Japan Medical
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Japan 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 Japan 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 Japan Medical Dynamic, you can compare the effects of market volatilities on HANOVER INSURANCE and Japan 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 Japan Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Japan Medical.
Diversification Opportunities for HANOVER INSURANCE and Japan Medical
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HANOVER and Japan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Japan Medical Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Medical Dynamic 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 Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Medical Dynamic has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Japan Medical go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Japan Medical
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.78 times more return on investment than Japan Medical. However, HANOVER INSURANCE is 1.28 times less risky than Japan Medical. It trades about 0.11 of its potential returns per unit of risk. Japan Medical Dynamic is currently generating about -0.03 per unit of risk. If you would invest 9,399 in HANOVER INSURANCE on September 12, 2024 and sell it today you would earn a total of 5,401 from holding HANOVER INSURANCE or generate 57.46% 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. Japan Medical Dynamic
Performance |
| Timeline |
| HANOVER INSURANCE |
| Japan Medical Dynamic |
HANOVER INSURANCE and Japan Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Japan Medical
The main advantage of trading using opposite HANOVER INSURANCE and Japan Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Japan 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 Japan Medical will offset losses from the drop in Japan Medical's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
| Japan Medical vs. Align Technology | Japan Medical vs. Superior Plus Corp | Japan Medical vs. SIVERS SEMICONDUCTORS AB | Japan Medical vs. Norsk Hydro ASA |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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