Correlation Between GEA GROUP and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both GEA GROUP 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 GEA GROUP and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEA GROUP and The Hanover Insurance, you can compare the effects of market volatilities on GEA GROUP 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 GEA GROUP with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEA GROUP and Hanover Insurance.
Diversification Opportunities for GEA GROUP and Hanover Insurance
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GEA and Hanover is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GEA GROUP and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and GEA GROUP 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 GEA 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 GEA GROUP i.e., GEA GROUP and Hanover Insurance go up and down completely randomly.
Pair Corralation between GEA GROUP and Hanover Insurance
Assuming the 90 days horizon GEA GROUP is expected to generate 0.53 times more return on investment than Hanover Insurance. However, GEA GROUP is 1.89 times less risky than Hanover Insurance. It trades about 0.43 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.08 per unit of risk. If you would invest 4,882 in GEA GROUP on November 27, 2024 and sell it today you would earn a total of 553.00 from holding GEA GROUP or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEA GROUP vs. The Hanover Insurance
Performance |
| Timeline |
| GEA GROUP |
| Hanover Insurance |
GEA GROUP and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEA GROUP and Hanover Insurance
The main advantage of trading using opposite GEA GROUP and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEA GROUP 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.| GEA GROUP vs. Sunstone Hotel Investors | GEA GROUP vs. Zijin Mining Group | GEA GROUP vs. NH HOTEL GROUP | GEA GROUP vs. InterContinental Hotels Group |
| Hanover Insurance vs. Rayonier Advanced Materials | Hanover Insurance vs. Adtalem Global Education | Hanover Insurance vs. EEDUCATION ALBERT AB | Hanover Insurance vs. Martin Marietta Materials |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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