Correlation Between AM EAGLE and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and HANOVER 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 AM EAGLE and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and HANOVER INSURANCE, you can compare the effects of market volatilities on AM EAGLE and HANOVER 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 AM EAGLE with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and HANOVER INSURANCE.
Diversification Opportunities for AM EAGLE and HANOVER INSURANCE
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and HANOVER is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with HANOVER INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANOVER INSURANCE has no effect on the direction of AM EAGLE i.e., AM EAGLE and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between AM EAGLE and HANOVER INSURANCE
Assuming the 90 days trading horizon AM EAGLE is expected to generate 50.17 times less return on investment than HANOVER INSURANCE. In addition to that, AM EAGLE is 1.72 times more volatile than HANOVER INSURANCE. It trades about 0.0 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.36 per unit of volatility. If you would invest 13,400 in HANOVER INSURANCE on September 1, 2024 and sell it today you would earn a total of 1,800 from holding HANOVER INSURANCE or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. HANOVER INSURANCE
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| HANOVER INSURANCE |
AM EAGLE and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and HANOVER INSURANCE
The main advantage of trading using opposite AM EAGLE and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, HANOVER 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 HANOVER INSURANCE will offset losses from the drop in HANOVER INSURANCE's long position.| AM EAGLE vs. AVITA Medical | AM EAGLE vs. EAT WELL INVESTMENT | AM EAGLE vs. Diamyd Medical AB | AM EAGLE vs. CompuGroup Medical SE |
| HANOVER INSURANCE vs. SIVERS SEMICONDUCTORS AB | HANOVER INSURANCE vs. Darden Restaurants | HANOVER INSURANCE vs. Reliance Steel Aluminum | HANOVER INSURANCE vs. Q2M Managementberatung AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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