Correlation Between Hanover Insurance and CaixaBank
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and CaixaBank 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 CaixaBank 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 CaixaBank SA, you can compare the effects of market volatilities on Hanover Insurance and CaixaBank 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 CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and CaixaBank.
Diversification Opportunities for Hanover Insurance and CaixaBank
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanover and CaixaBank is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA 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 CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and CaixaBank go up and down completely randomly.
Pair Corralation between Hanover Insurance and CaixaBank
Assuming the 90 days horizon Hanover Insurance is expected to generate 2.23 times less return on investment than CaixaBank. But when comparing it to its historical volatility, The Hanover Insurance is 1.23 times less risky than CaixaBank. It trades about 0.04 of its potential returns per unit of risk. CaixaBank SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 333.00 in CaixaBank SA on October 16, 2024 and sell it today you would earn a total of 232.00 from holding CaixaBank SA or generate 69.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Hanover Insurance vs. CaixaBank SA
Performance |
| Timeline |
| Hanover Insurance |
| CaixaBank SA |
Hanover Insurance and CaixaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and CaixaBank
The main advantage of trading using opposite Hanover Insurance and CaixaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, CaixaBank 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 CaixaBank will offset losses from the drop in CaixaBank's long position.| Hanover Insurance vs. CeoTronics AG | Hanover Insurance vs. Datadog | Hanover Insurance vs. Linedata Services SA | Hanover Insurance vs. Sims Metal Management |
| CaixaBank vs. BNP Paribas SA | CaixaBank vs. BNP PARIBAS ADR | CaixaBank vs. Intesa Sanpaolo SpA | CaixaBank vs. Lloyds Banking Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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