Correlation Between CPU SOFTWAREHOUSE and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPU SOFTWAREHOUSE and The Hanover Insurance, you can compare the effects of market volatilities on CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPU SOFTWAREHOUSE and Hanover Insurance.
Diversification Opportunities for CPU SOFTWAREHOUSE and Hanover Insurance
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CPU and Hanover is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and Hanover Insurance go up and down completely randomly.
Pair Corralation between CPU SOFTWAREHOUSE and Hanover Insurance
Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to under-perform the Hanover Insurance. In addition to that, CPU SOFTWAREHOUSE is 1.24 times more volatile than The Hanover Insurance. It trades about -0.06 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.27 per unit of volatility. If you would invest 13,800 in The Hanover Insurance on August 25, 2024 and sell it today you would earn a total of 1,400 from holding The Hanover Insurance or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPU SOFTWAREHOUSE vs. The Hanover Insurance
Performance |
| Timeline |
| CPU SOFTWAREHOUSE |
| Hanover Insurance |
CPU SOFTWAREHOUSE and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPU SOFTWAREHOUSE and Hanover Insurance
The main advantage of trading using opposite CPU SOFTWAREHOUSE and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPU SOFTWAREHOUSE 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.| CPU SOFTWAREHOUSE vs. Apple Inc | CPU SOFTWAREHOUSE vs. Apple Inc | CPU SOFTWAREHOUSE vs. Apple Inc | CPU SOFTWAREHOUSE vs. Apple Inc |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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