Correlation Between Hanover Insurance and Gaming
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Gaming 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 Gaming 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 Gaming and Leisure, you can compare the effects of market volatilities on Hanover Insurance and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Gaming.
Diversification Opportunities for Hanover Insurance and Gaming
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Gaming is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Gaming go up and down completely randomly.
Pair Corralation between Hanover Insurance and Gaming
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.26 times more return on investment than Gaming. However, Hanover Insurance is 1.26 times more volatile than Gaming and Leisure. It trades about 0.03 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.01 per unit of risk. If you would invest 12,654 in The Hanover Insurance on October 29, 2024 and sell it today you would earn a total of 1,846 from holding The Hanover Insurance or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Gaming and Leisure
Performance |
| Timeline |
| Hanover Insurance |
| Gaming and Leisure |
Hanover Insurance and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Gaming
The main advantage of trading using opposite Hanover Insurance and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Hanover Insurance vs. TITANIUM TRANSPORTGROUP | Hanover Insurance vs. MARKET VECTR RETAIL | Hanover Insurance vs. SPARTAN STORES | Hanover Insurance vs. NTG Nordic Transport |
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 Stocks Directory module to find actively traded stocks across global markets.
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