Correlation Between Hanover Insurance and HEIA
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and HEIA 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 HEIA 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 HEIA, you can compare the effects of market volatilities on Hanover Insurance and HEIA 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 HEIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and HEIA.
Diversification Opportunities for Hanover Insurance and HEIA
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and HEIA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and HEIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEIA 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 HEIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEIA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and HEIA go up and down completely randomly.
Pair Corralation between Hanover Insurance and HEIA
If you would invest 13,600 in The Hanover Insurance on August 29, 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 Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
The Hanover Insurance vs. HEIA
Performance |
| Timeline |
| Hanover Insurance |
| HEIA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hanover Insurance and HEIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and HEIA
The main advantage of trading using opposite Hanover Insurance and HEIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, HEIA 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 HEIA will offset losses from the drop in HEIA's long position.| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Beazley PLC |
| HEIA vs. Merit Medical Systems | HEIA vs. Apollo Medical Holdings | HEIA vs. MEDICAL FACILITIES NEW | HEIA vs. SBM OFFSHORE |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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