Correlation Between Hanover Insurance and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Atmos Energy 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 Atmos Energy 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 Atmos Energy, you can compare the effects of market volatilities on Hanover Insurance and Atmos Energy 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 Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Atmos Energy.
Diversification Opportunities for Hanover Insurance and Atmos Energy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Atmos is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy 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 Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Atmos Energy go up and down completely randomly.
Pair Corralation between Hanover Insurance and Atmos Energy
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.06 times less return on investment than Atmos Energy. In addition to that, Hanover Insurance is 1.35 times more volatile than Atmos Energy. It trades about 0.04 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.06 per unit of volatility. If you would invest 10,612 in Atmos Energy on September 3, 2024 and sell it today you would earn a total of 3,688 from holding Atmos Energy or generate 34.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Atmos Energy
Performance |
| Timeline |
| Hanover Insurance |
| Atmos Energy |
Hanover Insurance and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Atmos Energy
The main advantage of trading using opposite Hanover Insurance and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| Hanover Insurance vs. Datadog | Hanover Insurance vs. CARSALESCOM | Hanover Insurance vs. DATANG INTL POW | Hanover Insurance vs. Grupo Carso SAB |
| Atmos Energy vs. Warner Music Group | Atmos Energy vs. CNVISION MEDIA | Atmos Energy vs. Beijing Media | Atmos Energy vs. Tencent Music Entertainment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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