Correlation Between Hanover Insurance and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on Hanover Insurance and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and REVO INSURANCE.
Diversification Opportunities for Hanover Insurance and REVO INSURANCE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and REVO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Hanover Insurance and REVO INSURANCE
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.23 times more return on investment than REVO INSURANCE. However, Hanover Insurance is 1.23 times more volatile than REVO INSURANCE SPA. It trades about 0.27 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.27 per unit of risk. If you would invest 13,800 in The Hanover Insurance on August 25, 2024 and sell it today you would earn a total of 1,400 from holding The Hanover Insurance or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Hanover Insurance |
| REVO INSURANCE SPA |
Hanover Insurance and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and REVO INSURANCE
The main advantage of trading using opposite Hanover Insurance and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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