Correlation Between GEAR4MUSIC (HLDGS) and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and HANOVER INSURANCE, you can compare the effects of market volatilities on GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC (HLDGS) and HANOVER INSURANCE.
Diversification Opportunities for GEAR4MUSIC (HLDGS) and HANOVER INSURANCE
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEAR4MUSIC and HANOVER is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC (HLDGS) i.e., GEAR4MUSIC (HLDGS) and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between GEAR4MUSIC (HLDGS) and HANOVER INSURANCE
Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to under-perform the HANOVER INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, GEAR4MUSIC LS 10 is 1.4 times less risky than HANOVER INSURANCE. The stock trades about -0.13 of its potential returns per unit of risk. The HANOVER INSURANCE is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,400 in HANOVER INSURANCE on November 27, 2024 and sell it today you would earn a total of 400.00 from holding HANOVER INSURANCE or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. HANOVER INSURANCE
Performance |
| Timeline |
| GEAR4MUSIC (HLDGS) |
| HANOVER INSURANCE |
GEAR4MUSIC (HLDGS) and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC (HLDGS) and HANOVER INSURANCE
The main advantage of trading using opposite GEAR4MUSIC (HLDGS) and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC (HLDGS) 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.| GEAR4MUSIC (HLDGS) vs. LINMON MEDIA LTD | GEAR4MUSIC (HLDGS) vs. Universal Entertainment | GEAR4MUSIC (HLDGS) vs. CNVISION MEDIA | GEAR4MUSIC (HLDGS) vs. JIAHUA STORES |
| HANOVER INSURANCE vs. SOLSTAD OFFSHORE NK | HANOVER INSURANCE vs. Eidesvik Offshore ASA | HANOVER INSURANCE vs. URBAN OUTFITTERS | HANOVER INSURANCE vs. EIDESVIK OFFSHORE NK |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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