Correlation Between HANOVER INSURANCE and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on HANOVER INSURANCE and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and SCOTT TECHNOLOGY.
Diversification Opportunities for HANOVER INSURANCE and SCOTT TECHNOLOGY
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and SCOTT is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and SCOTT TECHNOLOGY
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 2.22 times less return on investment than SCOTT TECHNOLOGY. But when comparing it to its historical volatility, HANOVER INSURANCE is 1.24 times less risky than SCOTT TECHNOLOGY. It trades about 0.03 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 117.00 in SCOTT TECHNOLOGY on November 5, 2024 and sell it today you would earn a total of 2.00 from holding SCOTT TECHNOLOGY or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| HANOVER INSURANCE |
| SCOTT TECHNOLOGY |
HANOVER INSURANCE and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and SCOTT TECHNOLOGY
The main advantage of trading using opposite HANOVER INSURANCE and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| HANOVER INSURANCE vs. Singapore Airlines Limited | HANOVER INSURANCE vs. SOUTHWEST AIRLINES | HANOVER INSURANCE vs. Southwest Airlines Co | HANOVER INSURANCE vs. ASURE SOFTWARE |
| SCOTT TECHNOLOGY vs. MCEWEN MINING INC | SCOTT TECHNOLOGY vs. Aristocrat Leisure Limited | SCOTT TECHNOLOGY vs. ANTA SPORTS PRODUCT | SCOTT TECHNOLOGY vs. Globex Mining Enterprises |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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