Correlation Between Hanover Insurance and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and SolarEdge Technologies 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 SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hanover Insurance and SolarEdge Technologies, you can compare the effects of market volatilities on Hanover Insurance and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and SolarEdge Technologies.
Diversification Opportunities for Hanover Insurance and SolarEdge Technologies
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanover and SolarEdge is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 The Hanover Insurance are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Hanover Insurance and SolarEdge Technologies
Assuming the 90 days horizon Hanover Insurance is expected to generate 12.17 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, The Hanover Insurance is 6.86 times less risky than SolarEdge Technologies. It trades about 0.06 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,211 in SolarEdge Technologies on September 12, 2024 and sell it today you would earn a total of 138.00 from holding SolarEdge Technologies or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. SolarEdge Technologies
Performance |
| Timeline |
| Hanover Insurance |
| SolarEdge Technologies |
Hanover Insurance and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and SolarEdge Technologies
The main advantage of trading using opposite Hanover Insurance and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
| SolarEdge Technologies vs. The Hanover Insurance | SolarEdge Technologies vs. Lion One Metals | SolarEdge Technologies vs. Zijin Mining Group | SolarEdge Technologies vs. CDN IMPERIAL BANK |
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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