Correlation Between Hanover Insurance and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Halma Plc 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 Halma Plc 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 Halma plc, you can compare the effects of market volatilities on Hanover Insurance and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Halma Plc.
Diversification Opportunities for Hanover Insurance and Halma Plc
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Halma is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Halma Plc go up and down completely randomly.
Pair Corralation between Hanover Insurance and Halma Plc
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.83 times more return on investment than Halma Plc. However, The Hanover Insurance is 1.21 times less risky than Halma Plc. It trades about -0.08 of its potential returns per unit of risk. Halma plc is currently generating about -0.1 per unit of risk. If you would invest 14,500 in The Hanover Insurance on October 17, 2024 and sell it today you would lose (300.00) from holding The Hanover Insurance or give up 2.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
The Hanover Insurance vs. Halma plc
Performance |
| Timeline |
| Hanover Insurance |
| Halma plc |
Hanover Insurance and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Halma Plc
The main advantage of trading using opposite Hanover Insurance and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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