Correlation Between Hanover Insurance and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on Hanover Insurance and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Evonik Industries.
Diversification Opportunities for Hanover Insurance and Evonik Industries
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanover and Evonik is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Evonik Industries go up and down completely randomly.
Pair Corralation between Hanover Insurance and Evonik Industries
Assuming the 90 days horizon Hanover Insurance is expected to generate 3.24 times less return on investment than Evonik Industries. In addition to that, Hanover Insurance is 1.11 times more volatile than Evonik Industries AG. It trades about 0.08 of its total potential returns per unit of risk. Evonik Industries AG is currently generating about 0.29 per unit of volatility. If you would invest 1,647 in Evonik Industries AG on October 23, 2024 and sell it today you would earn a total of 121.00 from holding Evonik Industries AG or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Evonik Industries AG
Performance |
| Timeline |
| Hanover Insurance |
| Evonik Industries |
Hanover Insurance and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Evonik Industries
The main advantage of trading using opposite Hanover Insurance and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| Hanover Insurance vs. Commercial Vehicle Group | Hanover Insurance vs. Goodyear Tire Rubber | Hanover Insurance vs. GEELY AUTOMOBILE | Hanover Insurance vs. CarsalesCom |
| Evonik Industries vs. Linde plc | Evonik Industries vs. Linde PLC | Evonik Industries vs. Air Liquide SA | Evonik Industries vs. Ecolab Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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