Correlation Between Hanover Insurance and SALMAR
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and SALMAR 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 SALMAR 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 SALMAR, you can compare the effects of market volatilities on Hanover Insurance and SALMAR 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 SALMAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and SALMAR.
Diversification Opportunities for Hanover Insurance and SALMAR
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hanover and SALMAR is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and SALMAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALMAR 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 SALMAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALMAR has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and SALMAR go up and down completely randomly.
Pair Corralation between Hanover Insurance and SALMAR
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.96 times more return on investment than SALMAR. However, The Hanover Insurance is 1.04 times less risky than SALMAR. It trades about 0.28 of its potential returns per unit of risk. SALMAR is currently generating about 0.02 per unit of risk. If you would invest 13,800 in The Hanover Insurance on August 26, 2024 and sell it today you would earn a total of 1,500 from holding The Hanover Insurance or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. SALMAR
Performance |
| Timeline |
| Hanover Insurance |
| SALMAR |
Hanover Insurance and SALMAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and SALMAR
The main advantage of trading using opposite Hanover Insurance and SALMAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, SALMAR 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 SALMAR will offset losses from the drop in SALMAR's long position.| Hanover Insurance vs. Tradeweb Markets | Hanover Insurance vs. American Eagle Outfitters | Hanover Insurance vs. Vastned Retail NV | Hanover Insurance vs. Salesforce |
| SALMAR vs. TFS FINANCIAL | SALMAR vs. KB HOME | SALMAR vs. Tri Pointe Homes | SALMAR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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