Correlation Between Hanover Insurance and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Sekisui Chemical 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 Sekisui Chemical 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 Sekisui Chemical Co, you can compare the effects of market volatilities on Hanover Insurance and Sekisui Chemical 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Sekisui Chemical.
Diversification Opportunities for Hanover Insurance and Sekisui Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Sekisui is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Hanover Insurance and Sekisui Chemical
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.9 times more return on investment than Sekisui Chemical. However, The Hanover Insurance is 1.11 times less risky than Sekisui Chemical. It trades about -0.06 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about -0.29 per unit of risk. If you would invest 14,800 in The Hanover Insurance on October 28, 2024 and sell it today you would lose (300.00) from holding The Hanover Insurance or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Sekisui Chemical Co
Performance |
| Timeline |
| Hanover Insurance |
| Sekisui Chemical |
Hanover Insurance and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Sekisui Chemical
The main advantage of trading using opposite Hanover Insurance and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Loews Corp | Hanover Insurance vs. American Financial Group |
| Sekisui Chemical vs. Virtu Financial | Sekisui Chemical vs. Chiba Bank | Sekisui Chemical vs. SUN LIFE FINANCIAL | Sekisui Chemical vs. NTT DATA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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