Correlation Between Air Liquide and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Air Liquide 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 Air Liquide and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Liquide SA and The Hanover Insurance, you can compare the effects of market volatilities on Air Liquide 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 Air Liquide with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Hanover Insurance.
Diversification Opportunities for Air Liquide and Hanover Insurance
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Hanover is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Air Liquide 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 Air Liquide SA 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 Air Liquide i.e., Air Liquide and Hanover Insurance go up and down completely randomly.
Pair Corralation between Air Liquide and Hanover Insurance
Assuming the 90 days horizon Air Liquide SA is expected to generate 0.72 times more return on investment than Hanover Insurance. However, Air Liquide SA is 1.39 times less risky than Hanover Insurance. It trades about 0.06 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 11,783 in Air Liquide SA on September 12, 2024 and sell it today you would earn a total of 4,389 from holding Air Liquide SA or generate 37.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. The Hanover Insurance
Performance |
| Timeline |
| Air Liquide SA |
| Hanover Insurance |
Air Liquide and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Hanover Insurance
The main advantage of trading using opposite Air Liquide and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide 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.| Air Liquide vs. AIR LIQUIDE ADR | Air Liquide vs. Shin Etsu Chemical Co | Air Liquide vs. Ganfeng Lithium Co | Air Liquide vs. Superior Plus Corp |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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