Correlation Between Hanover Insurance and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Macquarie Group 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 Macquarie Group 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 Macquarie Group Limited, you can compare the effects of market volatilities on Hanover Insurance and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Macquarie Group.
Diversification Opportunities for Hanover Insurance and Macquarie Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Macquarie is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Macquarie Group go up and down completely randomly.
Pair Corralation between Hanover Insurance and Macquarie Group
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.8 times less return on investment than Macquarie Group. But when comparing it to its historical volatility, The Hanover Insurance is 1.07 times less risky than Macquarie Group. It trades about 0.03 of its potential returns per unit of risk. Macquarie Group Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,659 in Macquarie Group Limited on August 29, 2024 and sell it today you would earn a total of 4,591 from holding Macquarie Group Limited or generate 47.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Macquarie Group Limited
Performance |
| Timeline |
| Hanover Insurance |
| Macquarie Group |
Hanover Insurance and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Macquarie Group
The main advantage of trading using opposite Hanover Insurance and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.| Hanover Insurance vs. Samsung Electronics Co | Hanover Insurance vs. Corporate Office Properties | Hanover Insurance vs. ARROW ELECTRONICS | Hanover Insurance vs. KENEDIX OFFICE INV |
| Macquarie Group vs. MSCI Inc | Macquarie Group vs. Superior Plus Corp | Macquarie Group vs. NMI Holdings | Macquarie Group vs. Origin Agritech |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |