Correlation Between Hanover Insurance and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and MEDICAL FACILITIES 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 MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on Hanover Insurance and MEDICAL FACILITIES 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 MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and MEDICAL FACILITIES.
Diversification Opportunities for Hanover Insurance and MEDICAL FACILITIES
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and MEDICAL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between Hanover Insurance and MEDICAL FACILITIES
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.68 times more return on investment than MEDICAL FACILITIES. However, The Hanover Insurance is 1.48 times less risky than MEDICAL FACILITIES. It trades about 0.38 of its potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.24 per unit of risk. If you would invest 13,600 in The Hanover Insurance on August 28, 2024 and sell it today you would earn a total of 1,900 from holding The Hanover Insurance or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. MEDICAL FACILITIES NEW
Performance |
| Timeline |
| Hanover Insurance |
| MEDICAL FACILITIES NEW |
Hanover Insurance and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and MEDICAL FACILITIES
The main advantage of trading using opposite Hanover Insurance and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.| Hanover Insurance vs. BOSTON BEER A | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. KINGBOARD CHEMICAL | Hanover Insurance vs. ScanSource |
| MEDICAL FACILITIES vs. Soken Chemical Engineering | MEDICAL FACILITIES vs. Mitsui Chemicals | MEDICAL FACILITIES vs. Eastman Chemical | MEDICAL FACILITIES vs. Sinopec Shanghai Petrochemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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