Correlation Between Granite Construction and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and HANOVER INSURANCE, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and HANOVER INSURANCE.
Diversification Opportunities for Granite Construction and HANOVER INSURANCE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and HANOVER is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Granite Construction and HANOVER INSURANCE
Assuming the 90 days trading horizon Granite Construction is expected to under-perform the HANOVER INSURANCE. In addition to that, Granite Construction is 1.28 times more volatile than HANOVER INSURANCE. It trades about -0.02 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.11 per unit of volatility. If you would invest 14,300 in HANOVER INSURANCE on November 8, 2024 and sell it today you would earn a total of 500.00 from holding HANOVER INSURANCE or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Granite Construction vs. HANOVER INSURANCE
Performance |
| Timeline |
| Granite Construction |
| HANOVER INSURANCE |
Granite Construction and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and HANOVER INSURANCE
The main advantage of trading using opposite Granite Construction and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Dentsply Sirona | Granite Construction vs. Daido Steel Co | Granite Construction vs. Mount Gibson Iron | Granite Construction vs. Gladstone Investment |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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