Correlation Between CAL-MAINE FOODS and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS 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 FOODS 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 FOODS 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 FOODS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and Hanover Insurance.
Diversification Opportunities for CAL-MAINE FOODS and Hanover Insurance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAL-MAINE 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 FOODS 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 FOODS i.e., CAL-MAINE FOODS and Hanover Insurance go up and down completely randomly.
Pair Corralation between CAL-MAINE FOODS and Hanover Insurance
Assuming the 90 days trading horizon CAL-MAINE FOODS is expected to generate 1.2 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 0.35 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 13,700 in The Hanover Insurance on September 1, 2024 and sell it today you would earn a total of 2,100 from holding The Hanover Insurance or generate 15.33% 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 FOODS and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL-MAINE FOODS and Hanover Insurance
The main advantage of trading using opposite CAL-MAINE FOODS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL-MAINE FOODS 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 FOODS vs. Gold Road Resources | CAL-MAINE FOODS vs. Transportadora de Gas | CAL-MAINE FOODS vs. GOLD ROAD RES | CAL-MAINE FOODS vs. Air Transport Services |
| Hanover Insurance vs. National Beverage Corp | Hanover Insurance vs. United Breweries Co | Hanover Insurance vs. Sabra Health Care | Hanover Insurance vs. Clearside Biomedical |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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