Correlation Between Cedar Realty and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Cedar Realty 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 Cedar Realty and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and The Hanover Insurance, you can compare the effects of market volatilities on Cedar Realty 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 Cedar Realty with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Hanover Insurance.
Diversification Opportunities for Cedar Realty and Hanover Insurance
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cedar and Hanover is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and Hanover Insurance go up and down completely randomly.
Pair Corralation between Cedar Realty and Hanover Insurance
Assuming the 90 days trading horizon Cedar Realty is expected to generate 4.81 times less return on investment than Hanover Insurance. In addition to that, Cedar Realty is 1.26 times more volatile than The Hanover Insurance. It trades about 0.07 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.44 per unit of volatility. If you would invest 14,714 in The Hanover Insurance on September 3, 2024 and sell it today you would earn a total of 1,787 from holding The Hanover Insurance or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cedar Realty Trust vs. The Hanover Insurance
Performance |
| Timeline |
| Cedar Realty Trust |
| Hanover Insurance |
Cedar Realty and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cedar Realty and Hanover Insurance
The main advantage of trading using opposite Cedar Realty and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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