Correlation Between Hanover Insurance and X FAB
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Hanover Insurance and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and X FAB.
Diversification Opportunities for Hanover Insurance and X FAB
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanover and XFB is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and X FAB go up and down completely randomly.
Pair Corralation between Hanover Insurance and X FAB
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.61 times more return on investment than X FAB. However, The Hanover Insurance is 1.65 times less risky than X FAB. It trades about 0.03 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.04 per unit of risk. If you would invest 12,465 in The Hanover Insurance on November 1, 2024 and sell it today you would earn a total of 2,335 from holding The Hanover Insurance or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Hanover Insurance |
| X FAB Silicon |
Hanover Insurance and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and X FAB
The main advantage of trading using opposite Hanover Insurance and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Hanover Insurance vs. Verizon Communications | Hanover Insurance vs. ecotel communication ag | Hanover Insurance vs. CITIC Telecom International | Hanover Insurance vs. Zoom Video Communications |
| X FAB vs. Carsales | X FAB vs. The Hanover Insurance | X FAB vs. Safety Insurance Group | X FAB vs. PACIFIC ONLINE |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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