Correlation Between Hanover Insurance and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on Hanover Insurance and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and AIR PRODCHEMICALS.
Diversification Opportunities for Hanover Insurance and AIR PRODCHEMICALS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and AIR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between Hanover Insurance and AIR PRODCHEMICALS
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.84 times more return on investment than AIR PRODCHEMICALS. However, The Hanover Insurance is 1.19 times less risky than AIR PRODCHEMICALS. It trades about 0.14 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.06 per unit of risk. If you would invest 11,255 in The Hanover Insurance on September 22, 2024 and sell it today you would earn a total of 3,045 from holding The Hanover Insurance or generate 27.05% 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. AIR PRODCHEMICALS
Performance |
| Timeline |
| Hanover Insurance |
| AIR PRODCHEMICALS |
Hanover Insurance and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and AIR PRODCHEMICALS
The main advantage of trading using opposite Hanover Insurance and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| Hanover Insurance vs. Air Lease | Hanover Insurance vs. SLR Investment Corp | Hanover Insurance vs. Virtus Investment Partners | Hanover Insurance vs. Jacquet Metal Service |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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