Correlation Between FARM 51 and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and HANOVER INSURANCE, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and HANOVER INSURANCE.
Diversification Opportunities for FARM 51 and HANOVER INSURANCE
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and HANOVER is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and FARM 51 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 FARM 51 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 FARM 51 i.e., FARM 51 and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between FARM 51 and HANOVER INSURANCE
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 1.95 times more return on investment than HANOVER INSURANCE. However, FARM 51 is 1.95 times more volatile than HANOVER INSURANCE. It trades about 0.19 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.11 per unit of risk. If you would invest 297.00 in FARM 51 GROUP on November 8, 2024 and sell it today you would earn a total of 37.00 from holding FARM 51 GROUP or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. HANOVER INSURANCE
Performance |
| Timeline |
| FARM 51 GROUP |
| HANOVER INSURANCE |
FARM 51 and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and HANOVER INSURANCE
The main advantage of trading using opposite FARM 51 and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. Planet Fitness | FARM 51 vs. Telecom Argentina SA | FARM 51 vs. Cellnex Telecom SA | FARM 51 vs. Zoom Video Communications |
| HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc | HANOVER INSURANCE vs. Apple Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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