Correlation Between Hanover Insurance and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and CHINA WATER 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 CHINA WATER 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 CHINA WATER IGR, you can compare the effects of market volatilities on Hanover Insurance and CHINA WATER 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 CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and CHINA WATER.
Diversification Opportunities for Hanover Insurance and CHINA WATER
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanover and CHINA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR 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 CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and CHINA WATER go up and down completely randomly.
Pair Corralation between Hanover Insurance and CHINA WATER
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.12 times more return on investment than CHINA WATER. However, The Hanover Insurance is 8.47 times less risky than CHINA WATER. It trades about 0.03 of its potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.21 per unit of risk. If you would invest 14,800 in The Hanover Insurance on November 3, 2024 and sell it today you would earn a total of 100.00 from holding The Hanover Insurance or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Hanover Insurance vs. CHINA WATER IGR
Performance |
| Timeline |
| Hanover Insurance |
| CHINA WATER IGR |
Hanover Insurance and CHINA WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and CHINA WATER
The main advantage of trading using opposite Hanover Insurance and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.| Hanover Insurance vs. Computershare Limited | Hanover Insurance vs. Tokyu Construction Co | Hanover Insurance vs. North American Construction | Hanover Insurance vs. ALEFARM BREWING DK 05 |
| CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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