Correlation Between Hanover Insurance and SALESFORCE INC
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and SALESFORCE INC 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 SALESFORCE INC 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 SALESFORCE INC CDR, you can compare the effects of market volatilities on Hanover Insurance and SALESFORCE INC 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 SALESFORCE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and SALESFORCE INC.
Diversification Opportunities for Hanover Insurance and SALESFORCE INC
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and SALESFORCE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR 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 SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and SALESFORCE INC go up and down completely randomly.
Pair Corralation between Hanover Insurance and SALESFORCE INC
Assuming the 90 days horizon Hanover Insurance is expected to generate 3.76 times less return on investment than SALESFORCE INC. But when comparing it to its historical volatility, The Hanover Insurance is 1.06 times less risky than SALESFORCE INC. It trades about 0.04 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,730 in SALESFORCE INC CDR on November 4, 2024 and sell it today you would earn a total of 100.00 from holding SALESFORCE INC CDR or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Hanover Insurance vs. SALESFORCE INC CDR
Performance |
| Timeline |
| Hanover Insurance |
| SALESFORCE INC CDR |
Hanover Insurance and SALESFORCE INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and SALESFORCE INC
The main advantage of trading using opposite Hanover Insurance and SALESFORCE INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, SALESFORCE INC 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 SALESFORCE INC will offset losses from the drop in SALESFORCE INC's long position.| Hanover Insurance vs. Acadia Healthcare | Hanover Insurance vs. OPKO HEALTH | Hanover Insurance vs. EPSILON HEALTHCARE LTD | Hanover Insurance vs. Lifeway Foods |
| SALESFORCE INC vs. BE Semiconductor Industries | SALESFORCE INC vs. Elmos Semiconductor SE | SALESFORCE INC vs. Firan Technology Group | SALESFORCE INC vs. BioNTech SE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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