Correlation Between Hanover Insurance and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance Group, you can compare the effects of market volatilities on Hanover Insurance and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Zurich Insurance.
Diversification Opportunities for Hanover Insurance and Zurich Insurance
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Zurich is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Zurich Insurance go up and down completely randomly.
Pair Corralation between Hanover Insurance and Zurich Insurance
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.54 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, The Hanover Insurance is 1.08 times less risky than Zurich Insurance. It trades about 0.04 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,021 in Zurich Insurance Group on November 27, 2024 and sell it today you would earn a total of 1,099 from holding Zurich Insurance Group or generate 54.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Zurich Insurance Group
Performance |
| Timeline |
| Hanover Insurance |
| Zurich Insurance |
Hanover Insurance and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Zurich Insurance
The main advantage of trading using opposite Hanover Insurance and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| Hanover Insurance vs. Rayonier Advanced Materials | Hanover Insurance vs. Adtalem Global Education | Hanover Insurance vs. EEDUCATION ALBERT AB | Hanover Insurance vs. Martin Marietta Materials |
| Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. American International Group | Zurich Insurance vs. Assicurazioni Generali SpA | Zurich Insurance vs. Sun Life Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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