Correlation Between Hanover Insurance and TFS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL, you can compare the effects of market volatilities on Hanover Insurance and TFS FINANCIAL 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and TFS FINANCIAL.
Diversification Opportunities for Hanover Insurance and TFS FINANCIAL
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and TFS is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and TFS FINANCIAL go up and down completely randomly.
Pair Corralation between Hanover Insurance and TFS FINANCIAL
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.66 times more return on investment than TFS FINANCIAL. However, The Hanover Insurance is 1.51 times less risky than TFS FINANCIAL. It trades about 0.32 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.21 per unit of risk. If you would invest 13,600 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 1,700 from holding The Hanover Insurance or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Hanover Insurance vs. TFS FINANCIAL
Performance |
| Timeline |
| Hanover Insurance |
| TFS FINANCIAL |
Hanover Insurance and TFS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and TFS FINANCIAL
The main advantage of trading using opposite Hanover Insurance and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, TFS FINANCIAL 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 TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL's long position.| Hanover Insurance vs. Tencent Music Entertainment | Hanover Insurance vs. DiamondRock Hospitality | Hanover Insurance vs. YOOMA WELLNESS INC | Hanover Insurance vs. JD SPORTS FASH |
| TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Superior Plus Corp | TFS FINANCIAL vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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