Correlation Between Dupont De and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Dupont De 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 Dupont De and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and The Hanover Insurance, you can compare the effects of market volatilities on Dupont De 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 Dupont De with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Hanover Insurance.
Diversification Opportunities for Dupont De and Hanover Insurance
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and Hanover is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Hanover Insurance go up and down completely randomly.
Pair Corralation between Dupont De and Hanover Insurance
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Hanover Insurance. In addition to that, Dupont De is 1.09 times more volatile than The Hanover Insurance. It trades about -0.01 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.31 per unit of volatility. If you would invest 14,915 in The Hanover Insurance on August 27, 2024 and sell it today you would earn a total of 1,445 from holding The Hanover Insurance or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. The Hanover Insurance
Performance |
| Timeline |
| Dupont De Nemours |
| Hanover Insurance |
Dupont De and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Hanover Insurance
The main advantage of trading using opposite Dupont De and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| 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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