Correlation Between Hanover Insurance and Universal Health
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Universal Health 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 Universal Health 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 Universal Health Services, you can compare the effects of market volatilities on Hanover Insurance and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Universal Health.
Diversification Opportunities for Hanover Insurance and Universal Health
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanover and Universal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Universal Health go up and down completely randomly.
Pair Corralation between Hanover Insurance and Universal Health
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.35 times less return on investment than Universal Health. But when comparing it to its historical volatility, The Hanover Insurance is 1.45 times less risky than Universal Health. It trades about 0.1 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12,757 in Universal Health Services on August 31, 2024 and sell it today you would earn a total of 6,543 from holding Universal Health Services or generate 51.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Hanover Insurance vs. Universal Health Services
Performance |
| Timeline |
| Hanover Insurance |
| Universal Health Services |
Hanover Insurance and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Universal Health
The main advantage of trading using opposite Hanover Insurance and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health'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 |
| Universal Health vs. BANKINTER ADR 2007 | Universal Health vs. The Hanover Insurance | Universal Health vs. DATANG INTL POW | Universal Health vs. CDN IMPERIAL BANK |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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