Correlation Between JBG SMITH and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both JBG SMITH 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 JBG SMITH and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JBG SMITH Properties and The Hanover Insurance, you can compare the effects of market volatilities on JBG SMITH 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 JBG SMITH with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and Hanover Insurance.
Diversification Opportunities for JBG SMITH and Hanover Insurance
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JBG and Hanover is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and JBG SMITH 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 JBG SMITH Properties 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 JBG SMITH i.e., JBG SMITH and Hanover Insurance go up and down completely randomly.
Pair Corralation between JBG SMITH and Hanover Insurance
Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 2.33 times more return on investment than Hanover Insurance. However, JBG SMITH is 2.33 times more volatile than The Hanover Insurance. It trades about -0.04 of its potential returns per unit of risk. The Hanover Insurance is currently generating about -0.17 per unit of risk. If you would invest 1,670 in JBG SMITH Properties on September 12, 2024 and sell it today you would lose (44.00) from holding JBG SMITH Properties or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBG SMITH Properties vs. The Hanover Insurance
Performance |
| Timeline |
| JBG SMITH Properties |
| Hanover Insurance |
JBG SMITH and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBG SMITH and Hanover Insurance
The main advantage of trading using opposite JBG SMITH and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH 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.| JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth | JBG SMITH vs. Kilroy Realty Corp |
| Hanover Insurance vs. Aeye Inc | Hanover Insurance vs. Ep Emerging Markets | Hanover Insurance vs. LiCycle Holdings Corp | Hanover Insurance vs. SEI Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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