Correlation Between Harmony Gold and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Harmony Gold 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 Harmony Gold and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and HANOVER INSURANCE, you can compare the effects of market volatilities on Harmony Gold 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 Harmony Gold with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and HANOVER INSURANCE.
Diversification Opportunities for Harmony Gold and HANOVER INSURANCE
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and HANOVER is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Harmony Gold 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 Harmony Gold Mining 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 Harmony Gold i.e., Harmony Gold and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Harmony Gold and HANOVER INSURANCE
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the HANOVER INSURANCE. In addition to that, Harmony Gold is 1.63 times more volatile than HANOVER INSURANCE. It trades about -0.19 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about -0.2 per unit of volatility. If you would invest 15,405 in HANOVER INSURANCE on September 25, 2024 and sell it today you would lose (805.00) from holding HANOVER INSURANCE or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. HANOVER INSURANCE
Performance |
| Timeline |
| Harmony Gold Mining |
| HANOVER INSURANCE |
Harmony Gold and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and HANOVER INSURANCE
The main advantage of trading using opposite Harmony Gold and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold 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.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Newmont | Harmony Gold vs. Barrick Gold | Harmony Gold vs. Franco Nevada |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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