Correlation Between Hanover Insurance and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on Hanover Insurance and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Genuine Parts.
Diversification Opportunities for Hanover Insurance and Genuine Parts
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanover and Genuine is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Genuine Parts go up and down completely randomly.
Pair Corralation between Hanover Insurance and Genuine Parts
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.75 times more return on investment than Genuine Parts. However, The Hanover Insurance is 1.34 times less risky than Genuine Parts. It trades about 0.47 of its potential returns per unit of risk. Genuine Parts is currently generating about 0.33 per unit of risk. If you would invest 13,400 in The Hanover Insurance on September 3, 2024 and sell it today you would earn a total of 2,400 from holding The Hanover Insurance or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Genuine Parts
Performance |
| Timeline |
| Hanover Insurance |
| Genuine Parts |
Hanover Insurance and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Genuine Parts
The main advantage of trading using opposite Hanover Insurance and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| Hanover Insurance vs. Datadog | Hanover Insurance vs. CARSALESCOM | Hanover Insurance vs. DATANG INTL POW | Hanover Insurance vs. Grupo Carso SAB |
| Genuine Parts vs. The Hanover Insurance | Genuine Parts vs. Check Point Software | Genuine Parts vs. MACOM Technology Solutions | Genuine Parts vs. PT Bank Maybank |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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