Correlation Between Hanover Insurance and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and METHODE ELECTRONICS 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 METHODE ELECTRONICS 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 METHODE ELECTRONICS, you can compare the effects of market volatilities on Hanover Insurance and METHODE ELECTRONICS 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 METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and METHODE ELECTRONICS.
Diversification Opportunities for Hanover Insurance and METHODE ELECTRONICS
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanover and METHODE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS 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 METHODE ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METHODE ELECTRONICS has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between Hanover Insurance and METHODE ELECTRONICS
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.21 times less return on investment than METHODE ELECTRONICS. But when comparing it to its historical volatility, The Hanover Insurance is 2.81 times less risky than METHODE ELECTRONICS. It trades about 0.37 of its potential returns per unit of risk. METHODE ELECTRONICS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 870.00 in METHODE ELECTRONICS on August 29, 2024 and sell it today you would earn a total of 130.00 from holding METHODE ELECTRONICS or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. METHODE ELECTRONICS
Performance |
| Timeline |
| Hanover Insurance |
| METHODE ELECTRONICS |
Hanover Insurance and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and METHODE ELECTRONICS
The main advantage of trading using opposite Hanover Insurance and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, METHODE ELECTRONICS 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 METHODE ELECTRONICS will offset losses from the drop in METHODE ELECTRONICS's long position.| Hanover Insurance vs. Samsung Electronics Co | Hanover Insurance vs. Corporate Office Properties | Hanover Insurance vs. ARROW ELECTRONICS | Hanover Insurance vs. KENEDIX OFFICE INV |
| METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Microsoft | METHODE ELECTRONICS vs. Microsoft |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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