Correlation Between JPMorgan Chase and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase 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 JPMorgan Chase and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Chase Co and The Hanover Insurance, you can compare the effects of market volatilities on JPMorgan Chase 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 JPMorgan Chase with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Hanover Insurance.
Diversification Opportunities for JPMorgan Chase and Hanover Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and Hanover is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and JPMorgan Chase 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 JPMorgan Chase Co 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 JPMorgan Chase i.e., JPMorgan Chase and Hanover Insurance go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Hanover Insurance
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.92 times more return on investment than Hanover Insurance. However, JPMorgan Chase Co is 1.09 times less risky than Hanover Insurance. It trades about 0.11 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 11,554 in JPMorgan Chase Co on September 12, 2024 and sell it today you would earn a total of 11,586 from holding JPMorgan Chase Co or generate 100.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. The Hanover Insurance
Performance |
| Timeline |
| JPMorgan Chase |
| Hanover Insurance |
JPMorgan Chase and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Hanover Insurance
The main advantage of trading using opposite JPMorgan Chase and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase 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.| JPMorgan Chase vs. PSI Software AG | JPMorgan Chase vs. SANOK RUBBER ZY | JPMorgan Chase vs. Mitsubishi Materials | JPMorgan Chase vs. Check Point Software |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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