Correlation Between AIR PRODCHEMICALS and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 PRODCHEMICALS 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 PRODCHEMICALS and The Hanover Insurance, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 PRODCHEMICALS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Hanover Insurance.
Diversification Opportunities for AIR PRODCHEMICALS and Hanover Insurance
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and Hanover is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS 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 PRODCHEMICALS 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 PRODCHEMICALS 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 PRODCHEMICALS i.e., AIR PRODCHEMICALS and Hanover Insurance go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Hanover Insurance
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to under-perform the Hanover Insurance. But the stock apears to be less risky and, when comparing its historical volatility, AIR PRODCHEMICALS is 1.27 times less risky than Hanover Insurance. The stock trades about -0.75 of its potential returns per unit of risk. The The Hanover Insurance is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 15,404 in The Hanover Insurance on October 1, 2024 and sell it today you would lose (604.00) from holding The Hanover Insurance or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. The Hanover Insurance
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Hanover Insurance |
AIR PRODCHEMICALS and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Hanover Insurance
The main advantage of trading using opposite AIR PRODCHEMICALS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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 PRODCHEMICALS vs. ePlay Digital | AIR PRODCHEMICALS vs. Coor Service Management | AIR PRODCHEMICALS vs. Playtech plc | AIR PRODCHEMICALS vs. Waste Management |
| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp | 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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