Correlation Between Hanover Insurance and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on Hanover Insurance and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Pernod Ricard.
Diversification Opportunities for Hanover Insurance and Pernod Ricard
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanover and Pernod is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Pernod Ricard go up and down completely randomly.
Pair Corralation between Hanover Insurance and Pernod Ricard
Assuming the 90 days horizon Hanover Insurance is expected to generate 2.12 times less return on investment than Pernod Ricard. But when comparing it to its historical volatility, The Hanover Insurance is 1.06 times less risky than Pernod Ricard. It trades about 0.03 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,850 in Pernod Ricard SA on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Pernod Ricard SA or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Pernod Ricard SA
Performance |
| Timeline |
| Hanover Insurance |
| Pernod Ricard SA |
Hanover Insurance and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Pernod Ricard
The main advantage of trading using opposite Hanover Insurance and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| Hanover Insurance vs. Computershare Limited | Hanover Insurance vs. Tokyu Construction Co | Hanover Insurance vs. North American Construction | Hanover Insurance vs. ALEFARM BREWING DK 05 |
| Pernod Ricard vs. UNIQA INSURANCE GR | Pernod Ricard vs. AIR LIQUIDE ADR | Pernod Ricard vs. Norwegian Air Shuttle | Pernod Ricard vs. SEALED AIR |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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