Correlation Between SBI Insurance and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both SBI Insurance 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 SBI Insurance and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and HANOVER INSURANCE, you can compare the effects of market volatilities on SBI Insurance 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 SBI Insurance with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and HANOVER INSURANCE.
Diversification Opportunities for SBI Insurance and HANOVER INSURANCE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and HANOVER is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and SBI Insurance 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 SBI Insurance Group 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 SBI Insurance i.e., SBI Insurance and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between SBI Insurance and HANOVER INSURANCE
Assuming the 90 days trading horizon SBI Insurance is expected to generate 1.15 times less return on investment than HANOVER INSURANCE. In addition to that, SBI Insurance is 1.07 times more volatile than HANOVER INSURANCE. It trades about 0.08 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.1 per unit of volatility. If you would invest 12,934 in HANOVER INSURANCE on November 2, 2024 and sell it today you would earn a total of 1,966 from holding HANOVER INSURANCE or generate 15.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. HANOVER INSURANCE
Performance |
| Timeline |
| SBI Insurance Group |
| HANOVER INSURANCE |
SBI Insurance and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and HANOVER INSURANCE
The main advantage of trading using opposite SBI Insurance and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance 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.| SBI Insurance vs. BANK OF CHINA | SBI Insurance vs. 24SEVENOFFICE GROUP AB | SBI Insurance vs. Webster Financial | SBI Insurance vs. Synchrony Financial |
| HANOVER INSURANCE vs. Cars Inc | HANOVER INSURANCE vs. Carsales | HANOVER INSURANCE vs. GEELY AUTOMOBILE | HANOVER INSURANCE vs. Canadian Utilities Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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