Correlation Between American Eagle and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both American 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 American 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 American Eagle Outfitters and The Hanover Insurance, you can compare the effects of market volatilities on American 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 American Eagle with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Hanover Insurance.
Diversification Opportunities for American Eagle and Hanover Insurance
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Hanover is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and American 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 American 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 American Eagle i.e., American Eagle and Hanover Insurance go up and down completely randomly.
Pair Corralation between American Eagle and Hanover Insurance
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the Hanover Insurance. In addition to that, American Eagle is 1.13 times more volatile than The Hanover Insurance. It trades about -0.11 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.32 per unit of volatility. If you would invest 13,600 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 1,700 from holding The Hanover Insurance or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Eagle Outfitters vs. The Hanover Insurance
Performance |
| Timeline |
| American Eagle Outfitters |
| Hanover Insurance |
American Eagle and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Hanover Insurance
The main advantage of trading using opposite American Eagle and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American 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.| American Eagle vs. PARKEN Sport Entertainment | American Eagle vs. Scandinavian Tobacco Group | American Eagle vs. JD SPORTS FASH | American Eagle vs. TOWNSQUARE MEDIA INC |
| Hanover Insurance vs. Tencent Music Entertainment | Hanover Insurance vs. DiamondRock Hospitality | Hanover Insurance vs. YOOMA WELLNESS INC | Hanover Insurance vs. JD SPORTS FASH |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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