Correlation Between Hanover Insurance and Zimmer Biomet
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Zimmer Biomet 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 Zimmer Biomet 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 Zimmer Biomet Holdings, you can compare the effects of market volatilities on Hanover Insurance and Zimmer Biomet 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 Zimmer Biomet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Zimmer Biomet.
Diversification Opportunities for Hanover Insurance and Zimmer Biomet
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Zimmer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings 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 Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Zimmer Biomet go up and down completely randomly.
Pair Corralation between Hanover Insurance and Zimmer Biomet
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.12 times more return on investment than Zimmer Biomet. However, Hanover Insurance is 1.12 times more volatile than Zimmer Biomet Holdings. It trades about 0.12 of its potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about 0.06 per unit of risk. If you would invest 13,218 in The Hanover Insurance on October 14, 2024 and sell it today you would earn a total of 1,382 from holding The Hanover Insurance or generate 10.46% 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. Zimmer Biomet Holdings
Performance |
| Timeline |
| Hanover Insurance |
| Zimmer Biomet Holdings |
Hanover Insurance and Zimmer Biomet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Zimmer Biomet
The main advantage of trading using opposite Hanover Insurance and Zimmer Biomet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Zimmer Biomet 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 Zimmer Biomet will offset losses from the drop in Zimmer Biomet's long position.| Hanover Insurance vs. TYSON FOODS A | Hanover Insurance vs. USWE SPORTS AB | Hanover Insurance vs. MTY Food Group | Hanover Insurance vs. TRAVEL LEISURE DL 01 |
| Zimmer Biomet vs. The Hanover Insurance | Zimmer Biomet vs. ARDAGH METAL PACDL 0001 | Zimmer Biomet vs. Air Transport Services | Zimmer Biomet 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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