Correlation Between Hanover Insurance and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on Hanover Insurance and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Cairo Communication.
Diversification Opportunities for Hanover Insurance and Cairo Communication
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanover and Cairo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Cairo Communication go up and down completely randomly.
Pair Corralation between Hanover Insurance and Cairo Communication
Assuming the 90 days horizon Hanover Insurance is expected to generate 16.24 times less return on investment than Cairo Communication. In addition to that, Hanover Insurance is 1.38 times more volatile than Cairo Communication SpA. It trades about 0.01 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.18 per unit of volatility. If you would invest 237.00 in Cairo Communication SpA on November 7, 2024 and sell it today you would earn a total of 12.00 from holding Cairo Communication SpA or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Cairo Communication SpA
Performance |
| Timeline |
| Hanover Insurance |
| Cairo Communication SpA |
Hanover Insurance and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Cairo Communication
The main advantage of trading using opposite Hanover Insurance and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| Hanover Insurance vs. Siamgas And Petrochemicals | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. EITZEN CHEMICALS | Hanover Insurance vs. MOLSON RS BEVERAGE |
| Cairo Communication vs. NAGOYA RAILROAD | Cairo Communication vs. EVS Broadcast Equipment | Cairo Communication vs. FIREWEED METALS P | Cairo Communication vs. Broadcom |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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