Correlation Between HANOVER INSURANCE and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Kaiser Aluminum 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 Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Kaiser Aluminum, you can compare the effects of market volatilities on HANOVER INSURANCE and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Kaiser Aluminum.
Diversification Opportunities for HANOVER INSURANCE and Kaiser Aluminum
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HANOVER and Kaiser is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Kaiser Aluminum
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.46 times more return on investment than Kaiser Aluminum. However, HANOVER INSURANCE is 2.16 times less risky than Kaiser Aluminum. It trades about 0.15 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.03 per unit of risk. If you would invest 11,354 in HANOVER INSURANCE on September 27, 2024 and sell it today you would earn a total of 3,246 from holding HANOVER INSURANCE or generate 28.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. Kaiser Aluminum
Performance |
| Timeline |
| HANOVER INSURANCE |
| Kaiser Aluminum |
HANOVER INSURANCE and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Kaiser Aluminum
The main advantage of trading using opposite HANOVER INSURANCE and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Microsoft | HANOVER INSURANCE vs. Microsoft |
| Kaiser Aluminum vs. ARDAGH METAL PACDL 0001 | Kaiser Aluminum vs. JD SPORTS FASH | Kaiser Aluminum vs. InPlay Oil Corp | Kaiser Aluminum vs. DISTRICT METALS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |