Correlation Between Hanover Insurance and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and CarsalesCom 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 CarsalesCom 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 CarsalesCom, you can compare the effects of market volatilities on Hanover Insurance and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and CarsalesCom.
Diversification Opportunities for Hanover Insurance and CarsalesCom
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and CarsalesCom is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and CarsalesCom go up and down completely randomly.
Pair Corralation between Hanover Insurance and CarsalesCom
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.9 times more return on investment than CarsalesCom. However, The Hanover Insurance is 1.11 times less risky than CarsalesCom. It trades about 0.11 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.08 per unit of risk. If you would invest 11,649 in The Hanover Insurance on September 1, 2024 and sell it today you would earn a total of 4,151 from holding The Hanover Insurance or generate 35.63% 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. CarsalesCom
Performance |
| Timeline |
| Hanover Insurance |
| CarsalesCom |
Hanover Insurance and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and CarsalesCom
The main advantage of trading using opposite Hanover Insurance and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Hanover Insurance vs. National Beverage Corp | Hanover Insurance vs. United Breweries Co | Hanover Insurance vs. Sabra Health Care | Hanover Insurance vs. Clearside Biomedical |
| CarsalesCom vs. Alphabet Class A | CarsalesCom vs. Alphabet Class A | CarsalesCom vs. Meta Platforms | CarsalesCom vs. Tencent Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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