Correlation Between CAL MAINE and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both CAL MAINE 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 CAL MAINE and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAL MAINE FOODS and The Hanover Insurance, you can compare the effects of market volatilities on CAL MAINE 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 CAL MAINE with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Hanover Insurance.
Diversification Opportunities for CAL MAINE and Hanover Insurance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAL and Hanover is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and CAL MAINE 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 CAL MAINE FOODS 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 CAL MAINE i.e., CAL MAINE and Hanover Insurance go up and down completely randomly.
Pair Corralation between CAL MAINE and Hanover Insurance
Assuming the 90 days trading horizon CAL MAINE is expected to generate 1.17 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, CAL MAINE FOODS is 1.09 times less risky than Hanover Insurance. It trades about 0.44 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 13,400 in The Hanover Insurance on September 3, 2024 and sell it today you would earn a total of 2,400 from holding The Hanover Insurance or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. The Hanover Insurance
Performance |
| Timeline |
| CAL MAINE FOODS |
| Hanover Insurance |
CAL MAINE and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Hanover Insurance
The main advantage of trading using opposite CAL MAINE and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE 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.| CAL MAINE vs. LG Display Co | CAL MAINE vs. USWE SPORTS AB | CAL MAINE vs. SINGAPORE AIRLINES | CAL MAINE vs. VIAPLAY GROUP AB |
| Hanover Insurance vs. Datadog | Hanover Insurance vs. CARSALESCOM | Hanover Insurance vs. DATANG INTL POW | Hanover Insurance vs. Grupo Carso SAB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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