Correlation Between Hanover Insurance and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and QBE Insurance 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 QBE Insurance 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 QBE Insurance Group, you can compare the effects of market volatilities on Hanover Insurance and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and QBE Insurance.
Diversification Opportunities for Hanover Insurance and QBE Insurance
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and QBE is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and QBE Insurance go up and down completely randomly.
Pair Corralation between Hanover Insurance and QBE Insurance
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.18 times less return on investment than QBE Insurance. In addition to that, Hanover Insurance is 1.17 times more volatile than QBE Insurance Group. It trades about 0.38 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.52 per unit of volatility. If you would invest 1,030 in QBE Insurance Group on September 1, 2024 and sell it today you would earn a total of 190.00 from holding QBE Insurance Group or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. QBE Insurance Group
Performance |
| Timeline |
| Hanover Insurance |
| QBE Insurance Group |
Hanover Insurance and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and QBE Insurance
The main advantage of trading using opposite Hanover Insurance and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| Hanover Insurance vs. National Beverage Corp | Hanover Insurance vs. United Breweries Co | Hanover Insurance vs. Sabra Health Care | Hanover Insurance vs. Clearside Biomedical |
| QBE Insurance vs. Sumitomo Rubber Industries | QBE Insurance vs. SANOK RUBBER ZY | QBE Insurance vs. Applied Materials | QBE Insurance vs. NEWELL RUBBERMAID |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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