Correlation Between Hanover Insurance and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on Hanover Insurance and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Sterling Construction.
Diversification Opportunities for Hanover Insurance and Sterling Construction
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Sterling is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Sterling Construction go up and down completely randomly.
Pair Corralation between Hanover Insurance and Sterling Construction
Assuming the 90 days horizon Hanover Insurance is expected to generate 3.27 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, The Hanover Insurance is 2.28 times less risky than Sterling Construction. It trades about 0.09 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,900 in Sterling Construction on September 2, 2024 and sell it today you would earn a total of 13,410 from holding Sterling Construction or generate 273.67% 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. Sterling Construction
Performance |
| Timeline |
| Hanover Insurance |
| Sterling Construction |
Hanover Insurance and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Sterling Construction
The main advantage of trading using opposite Hanover Insurance and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Hanover Insurance vs. Lion One Metals | Hanover Insurance vs. Jacquet Metal Service | Hanover Insurance vs. PARKEN Sport Entertainment | Hanover Insurance vs. Aluminum of |
| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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