Correlation Between Hanover Insurance and AIRBNB INC
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and AIRBNB INC 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 AIRBNB INC 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 AIRBNB INC DL 01, you can compare the effects of market volatilities on Hanover Insurance and AIRBNB INC 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 AIRBNB INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and AIRBNB INC.
Diversification Opportunities for Hanover Insurance and AIRBNB INC
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and AIRBNB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and AIRBNB INC DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRBNB INC DL 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 AIRBNB INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRBNB INC DL has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and AIRBNB INC go up and down completely randomly.
Pair Corralation between Hanover Insurance and AIRBNB INC
Assuming the 90 days horizon Hanover Insurance is expected to generate 2.36 times less return on investment than AIRBNB INC. But when comparing it to its historical volatility, The Hanover Insurance is 1.84 times less risky than AIRBNB INC. It trades about 0.03 of its potential returns per unit of risk. AIRBNB INC DL 01 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,582 in AIRBNB INC DL 01 on August 25, 2024 and sell it today you would earn a total of 3,634 from holding AIRBNB INC DL 01 or generate 37.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Hanover Insurance vs. AIRBNB INC DL 01
Performance |
| Timeline |
| Hanover Insurance |
| AIRBNB INC DL |
Hanover Insurance and AIRBNB INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and AIRBNB INC
The main advantage of trading using opposite Hanover Insurance and AIRBNB INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, AIRBNB INC 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 AIRBNB INC will offset losses from the drop in AIRBNB INC's long position.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
| AIRBNB INC vs. Sekisui Chemical Co | AIRBNB INC vs. Mitsui Chemicals | AIRBNB INC vs. Silicon Motion Technology | AIRBNB INC vs. Sanyo Chemical Industries |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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