Correlation Between HANOVER INSURANCE and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Novo Nordisk 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 Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Novo Nordisk AS, you can compare the effects of market volatilities on HANOVER INSURANCE and Novo Nordisk 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 Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Novo Nordisk.
Diversification Opportunities for HANOVER INSURANCE and Novo Nordisk
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HANOVER and Novo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS 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 Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Novo Nordisk go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Novo Nordisk
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.5 times more return on investment than Novo Nordisk. However, HANOVER INSURANCE is 2.01 times less risky than Novo Nordisk. It trades about 0.12 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.1 per unit of risk. If you would invest 12,144 in HANOVER INSURANCE on October 26, 2024 and sell it today you would earn a total of 2,656 from holding HANOVER INSURANCE or generate 21.87% 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. Novo Nordisk AS
Performance |
| Timeline |
| HANOVER INSURANCE |
| Novo Nordisk AS |
HANOVER INSURANCE and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Novo Nordisk
The main advantage of trading using opposite HANOVER INSURANCE and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Novo Nordisk 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 Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.| HANOVER INSURANCE vs. Wayside Technology Group | HANOVER INSURANCE vs. PEPTONIC MEDICAL | HANOVER INSURANCE vs. X FAB Silicon Foundries | HANOVER INSURANCE vs. CREO MEDICAL GRP |
| Novo Nordisk vs. Perdoceo Education | Novo Nordisk vs. CHINA EDUCATION GROUP | Novo Nordisk vs. The Hanover Insurance | Novo Nordisk 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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