Correlation Between HANOVER INSURANCE and LIBERTY DEFENSE
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and LIBERTY DEFENSE 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 LIBERTY DEFENSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and LIBERTY DEFENSE H, you can compare the effects of market volatilities on HANOVER INSURANCE and LIBERTY DEFENSE 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 LIBERTY DEFENSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and LIBERTY DEFENSE.
Diversification Opportunities for HANOVER INSURANCE and LIBERTY DEFENSE
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between HANOVER and LIBERTY is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and LIBERTY DEFENSE H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIBERTY DEFENSE H 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 LIBERTY DEFENSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIBERTY DEFENSE H has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and LIBERTY DEFENSE go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and LIBERTY DEFENSE
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to under-perform the LIBERTY DEFENSE. But the stock apears to be less risky and, when comparing its historical volatility, HANOVER INSURANCE is 7.75 times less risky than LIBERTY DEFENSE. The stock trades about -0.09 of its potential returns per unit of risk. The LIBERTY DEFENSE H is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 28.00 in LIBERTY DEFENSE H on October 30, 2024 and sell it today you would earn a total of 62.00 from holding LIBERTY DEFENSE H or generate 221.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. LIBERTY DEFENSE H
Performance |
| Timeline |
| HANOVER INSURANCE |
| LIBERTY DEFENSE H |
HANOVER INSURANCE and LIBERTY DEFENSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and LIBERTY DEFENSE
The main advantage of trading using opposite HANOVER INSURANCE and LIBERTY DEFENSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, LIBERTY DEFENSE 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 LIBERTY DEFENSE will offset losses from the drop in LIBERTY DEFENSE's long position.| HANOVER INSURANCE vs. DICKS Sporting Goods | HANOVER INSURANCE vs. SPORTING | HANOVER INSURANCE vs. ANTA SPORTS PRODUCT | HANOVER INSURANCE vs. AIR PRODCHEMICALS |
| LIBERTY DEFENSE vs. TOMBADOR IRON LTD | LIBERTY DEFENSE vs. Nippon Steel | LIBERTY DEFENSE vs. CHAMPION IRON | LIBERTY DEFENSE vs. Ross Stores |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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