Correlation Between Hanover Insurance and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Hanover Insurance and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Host Hotels.
Diversification Opportunities for Hanover Insurance and Host Hotels
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hanover and Host is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Host Hotels go up and down completely randomly.
Pair Corralation between Hanover Insurance and Host Hotels
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.54 times more return on investment than Host Hotels. However, Hanover Insurance is 1.54 times more volatile than Host Hotels Resorts. It trades about 0.12 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.15 per unit of risk. If you would invest 14,600 in The Hanover Insurance on November 9, 2024 and sell it today you would earn a total of 700.00 from holding The Hanover Insurance or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Host Hotels Resorts
Performance |
| Timeline |
| Hanover Insurance |
| Host Hotels Resorts |
Hanover Insurance and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Host Hotels
The main advantage of trading using opposite Hanover Insurance and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Hanover Insurance vs. Sabre Insurance Group | Hanover Insurance vs. SBI Insurance Group | Hanover Insurance vs. United Insurance Holdings | Hanover Insurance vs. CARDINAL HEALTH |
| Host Hotels vs. Highlight Communications AG | Host Hotels vs. Waste Management | Host Hotels vs. CeoTronics AG | Host Hotels vs. Sims Metal Management |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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