Correlation Between Hanover Insurance and Transportadora
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Hanover Insurance and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Transportadora.
Diversification Opportunities for Hanover Insurance and Transportadora
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanover and Transportadora is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Transportadora go up and down completely randomly.
Pair Corralation between Hanover Insurance and Transportadora
Assuming the 90 days horizon Hanover Insurance is expected to generate 6.09 times less return on investment than Transportadora. But when comparing it to its historical volatility, The Hanover Insurance is 2.62 times less risky than Transportadora. It trades about 0.03 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 870.00 in Transportadora de Gas on August 27, 2024 and sell it today you would earn a total of 1,910 from holding Transportadora de Gas or generate 219.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Transportadora de Gas
Performance |
| Timeline |
| Hanover Insurance |
| Transportadora de Gas |
Hanover Insurance and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Transportadora
The main advantage of trading using opposite Hanover Insurance and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Hanover Insurance vs. BOSTON BEER A | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. KINGBOARD CHEMICAL | Hanover Insurance vs. ScanSource |
| Transportadora vs. PennyMac Mortgage Investment | Transportadora vs. GEAR4MUSIC LS 10 | Transportadora vs. PRECISION DRILLING P | Transportadora vs. Pembina Pipeline Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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