Correlation Between Eastern and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and The Hanover Insurance, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Hanover Insurance.
Diversification Opportunities for Eastern and Hanover Insurance
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eastern and Hanover is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eastern 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 Eastern 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 Eastern 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 Eastern i.e., Eastern and Hanover Insurance go up and down completely randomly.
Pair Corralation between Eastern and Hanover Insurance
Considering the 90-day investment horizon Eastern Co is expected to generate 1.8 times more return on investment than Hanover Insurance. However, Eastern is 1.8 times more volatile than The Hanover Insurance. It trades about 0.26 of its potential returns per unit of risk. The Hanover Insurance is currently generating about -0.17 per unit of risk. If you would invest 2,714 in Eastern Co on September 12, 2024 and sell it today you would earn a total of 286.00 from holding Eastern Co or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. The Hanover Insurance
Performance |
| Timeline |
| Eastern |
| Hanover Insurance |
Eastern and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Hanover Insurance
The main advantage of trading using opposite Eastern and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| Hanover Insurance vs. Aeye Inc | Hanover Insurance vs. Ep Emerging Markets | Hanover Insurance vs. LiCycle Holdings Corp | Hanover Insurance vs. SEI Investments |
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.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |