Correlation Between Hanover Insurance and Cummins
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Cummins 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 Cummins 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 Cummins, you can compare the effects of market volatilities on Hanover Insurance and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Cummins.
Diversification Opportunities for Hanover Insurance and Cummins
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Cummins is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Cummins go up and down completely randomly.
Pair Corralation between Hanover Insurance and Cummins
Assuming the 90 days horizon The Hanover Insurance is expected to under-perform the Cummins. In addition to that, Hanover Insurance is 1.01 times more volatile than Cummins. It trades about -0.15 of its total potential returns per unit of risk. Cummins is currently generating about 0.1 per unit of volatility. If you would invest 34,435 in Cummins on September 15, 2024 and sell it today you would earn a total of 905.00 from holding Cummins or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Hanover Insurance vs. Cummins
Performance |
| Timeline |
| Hanover Insurance |
| Cummins |
Hanover Insurance and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Cummins
The main advantage of trading using opposite Hanover Insurance and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
| Cummins vs. The Hanover Insurance | Cummins vs. GALENA MINING LTD | Cummins vs. United Insurance Holdings | Cummins vs. Japan Post Insurance |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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