Correlation Between Hanover Insurance and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Regions 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 Regions 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 Regions Financial, you can compare the effects of market volatilities on Hanover Insurance and Regions 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Regions Financial.
Diversification Opportunities for Hanover Insurance and Regions Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Regions is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Regions Financial go up and down completely randomly.
Pair Corralation between Hanover Insurance and Regions Financial
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.3 times less return on investment than Regions Financial. But when comparing it to its historical volatility, The Hanover Insurance is 1.56 times less risky than Regions Financial. It trades about 0.36 of its potential returns per unit of risk. Regions Financial is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Regions Financial on August 31, 2024 and sell it today you would earn a total of 400.00 from holding Regions Financial or generate 18.18% 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. Regions Financial
Performance |
| Timeline |
| Hanover Insurance |
| Regions Financial |
Hanover Insurance and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Regions Financial
The main advantage of trading using opposite Hanover Insurance and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Hanover Insurance vs. Pentair plc | Hanover Insurance vs. AIR LIQUIDE ADR | Hanover Insurance vs. Norwegian Air Shuttle | Hanover Insurance vs. Computer And Technologies |
| Regions Financial vs. MOLSON RS BEVERAGE | Regions Financial vs. AOI Electronics Co | Regions Financial vs. Benchmark Electronics | Regions Financial vs. UMC Electronics Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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