Correlation Between Apple and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and HANOVER INSURANCE, you can compare the effects of market volatilities on Apple 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 Apple with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and HANOVER INSURANCE.
Diversification Opportunities for Apple and HANOVER INSURANCE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and HANOVER is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Apple 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 Apple Inc 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 Apple i.e., Apple and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Apple and HANOVER INSURANCE
Assuming the 90 days trading horizon Apple is expected to generate 1.33 times less return on investment than HANOVER INSURANCE. In addition to that, Apple is 1.13 times more volatile than HANOVER INSURANCE. It trades about 0.07 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.11 per unit of volatility. If you would invest 10,690 in HANOVER INSURANCE on August 25, 2024 and sell it today you would earn a total of 4,510 from holding HANOVER INSURANCE or generate 42.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. HANOVER INSURANCE
Performance |
| Timeline |
| Apple Inc |
| HANOVER INSURANCE |
Apple and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and HANOVER INSURANCE
The main advantage of trading using opposite Apple and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Perdoceo Education | Apple vs. UNITED UTILITIES GR | Apple vs. Federal Agricultural Mortgage | Apple vs. North American Construction |
| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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