Correlation Between HANOVER INSURANCE and SOLSTAD OFFSHORE
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on HANOVER INSURANCE and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and SOLSTAD OFFSHORE.
Diversification Opportunities for HANOVER INSURANCE and SOLSTAD OFFSHORE
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between HANOVER and SOLSTAD is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and SOLSTAD OFFSHORE go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and SOLSTAD OFFSHORE
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 2.11 times less return on investment than SOLSTAD OFFSHORE. But when comparing it to its historical volatility, HANOVER INSURANCE is 2.68 times less risky than SOLSTAD OFFSHORE. It trades about 0.24 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 272.00 in SOLSTAD OFFSHORE NK on August 30, 2024 and sell it today you would earn a total of 95.00 from holding SOLSTAD OFFSHORE NK or generate 34.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
HANOVER INSURANCE vs. SOLSTAD OFFSHORE NK
Performance |
| Timeline |
| HANOVER INSURANCE |
| SOLSTAD OFFSHORE |
HANOVER INSURANCE and SOLSTAD OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and SOLSTAD OFFSHORE
The main advantage of trading using opposite HANOVER INSURANCE and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE will offset losses from the drop in SOLSTAD OFFSHORE's long position.| HANOVER INSURANCE vs. JD SPORTS FASH | HANOVER INSURANCE vs. FIREWEED METALS P | HANOVER INSURANCE vs. GigaMedia | HANOVER INSURANCE vs. Jacquet Metal Service |
| SOLSTAD OFFSHORE vs. Chesapeake Utilities | SOLSTAD OFFSHORE vs. HF SINCLAIR P | SOLSTAD OFFSHORE vs. ALTAIR RES INC | SOLSTAD OFFSHORE vs. COLUMBIA SPORTSWEAR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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