Correlation Between Hanover Insurance and Cass Information
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Cass Information 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 Cass Information 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 Cass Information Systems, you can compare the effects of market volatilities on Hanover Insurance and Cass Information 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 Cass Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Cass Information.
Diversification Opportunities for Hanover Insurance and Cass Information
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and Cass is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Cass Information go up and down completely randomly.
Pair Corralation between Hanover Insurance and Cass Information
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.8 times more return on investment than Cass Information. However, The Hanover Insurance is 1.25 times less risky than Cass Information. It trades about 0.31 of its potential returns per unit of risk. Cass Information Systems is currently generating about 0.16 per unit of risk. If you would invest 13,600 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 1,700 from holding The Hanover Insurance or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Hanover Insurance vs. Cass Information Systems
Performance |
| Timeline |
| Hanover Insurance |
| Cass Information Systems |
Hanover Insurance and Cass Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Cass Information
The main advantage of trading using opposite Hanover Insurance and Cass Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Cass Information 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 Cass Information will offset losses from the drop in Cass Information's long position.| Hanover Insurance vs. Tencent Music Entertainment | Hanover Insurance vs. DiamondRock Hospitality | Hanover Insurance vs. YOOMA WELLNESS INC | Hanover Insurance vs. JD SPORTS FASH |
| Cass Information vs. Cintas | Cass Information vs. Superior Plus Corp | Cass Information vs. SIVERS SEMICONDUCTORS AB | Cass Information vs. Talanx AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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