Correlation Between Hanover Insurance and Star Diamond
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Star Diamond 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 Star Diamond 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 Star Diamond, you can compare the effects of market volatilities on Hanover Insurance and Star Diamond 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 Star Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Star Diamond.
Diversification Opportunities for Hanover Insurance and Star Diamond
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanover and Star is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Star Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Diamond 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 Star Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Diamond has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Star Diamond go up and down completely randomly.
Pair Corralation between Hanover Insurance and Star Diamond
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.06 times more return on investment than Star Diamond. However, The Hanover Insurance is 15.57 times less risky than Star Diamond. It trades about 0.38 of its potential returns per unit of risk. Star Diamond is currently generating about 0.02 per unit of risk. If you would invest 13,600 in The Hanover Insurance on August 28, 2024 and sell it today you would earn a total of 1,900 from holding The Hanover Insurance or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Star Diamond
Performance |
| Timeline |
| Hanover Insurance |
| Star Diamond |
Hanover Insurance and Star Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Star Diamond
The main advantage of trading using opposite Hanover Insurance and Star Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Star Diamond 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 Star Diamond will offset losses from the drop in Star Diamond's long position.| Hanover Insurance vs. BOSTON BEER A | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. KINGBOARD CHEMICAL | Hanover Insurance vs. ScanSource |
| Star Diamond vs. Superior Plus Corp | Star Diamond vs. NMI Holdings | Star Diamond vs. Origin Agritech | Star Diamond vs. SIVERS SEMICONDUCTORS AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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