Correlation Between Hanover Insurance and AXA SA
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and AXA SA 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 AXA SA 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 AXA SA, you can compare the effects of market volatilities on Hanover Insurance and AXA SA 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 AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and AXA SA.
Diversification Opportunities for Hanover Insurance and AXA SA
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanover and AXA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and AXA SA go up and down completely randomly.
Pair Corralation between Hanover Insurance and AXA SA
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.24 times more return on investment than AXA SA. However, Hanover Insurance is 1.24 times more volatile than AXA SA. It trades about 0.34 of its potential returns per unit of risk. AXA SA is currently generating about -0.18 per unit of risk. If you would invest 13,400 in The Hanover Insurance on September 5, 2024 and sell it today you would earn a total of 1,900 from holding The Hanover Insurance or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Hanover Insurance vs. AXA SA
Performance |
| Timeline |
| Hanover Insurance |
| AXA SA |
Hanover Insurance and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and AXA SA
The main advantage of trading using opposite Hanover Insurance and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, AXA SA 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 AXA SA will offset losses from the drop in AXA SA's long position.| Hanover Insurance vs. Loews Corp | Hanover Insurance vs. Superior Plus Corp | Hanover Insurance vs. NMI Holdings | Hanover Insurance vs. Origin Agritech |
| AXA SA vs. The Hanover Insurance | AXA SA vs. PT Bank Maybank | AXA SA vs. Nok Airlines PCL | AXA SA vs. BANKINTER ADR 2007 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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