Correlation Between Hanover Insurance and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on Hanover Insurance and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Molson Coors.
Diversification Opportunities for Hanover Insurance and Molson Coors
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and Molson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Molson Coors go up and down completely randomly.
Pair Corralation between Hanover Insurance and Molson Coors
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.12 times less return on investment than Molson Coors. But when comparing it to its historical volatility, The Hanover Insurance is 1.13 times less risky than Molson Coors. It trades about 0.27 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,152 in Molson Coors Brewing on August 25, 2024 and sell it today you would earn a total of 584.00 from holding Molson Coors Brewing or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Molson Coors Brewing
Performance |
| Timeline |
| Hanover Insurance |
| Molson Coors Brewing |
Hanover Insurance and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Molson Coors
The main advantage of trading using opposite Hanover Insurance and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
| Molson Coors vs. Fast Retailing Co | Molson Coors vs. BJs Wholesale Club | Molson Coors vs. ALERION CLEANPOWER | Molson Coors vs. Cleanaway Waste 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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