Correlation Between VIVA WINE and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both VIVA WINE 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 VIVA WINE and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and The Hanover Insurance, you can compare the effects of market volatilities on VIVA WINE 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 VIVA WINE with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Hanover Insurance.
Diversification Opportunities for VIVA WINE and Hanover Insurance
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VIVA and Hanover is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE 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 VIVA WINE 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 VIVA WINE 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 VIVA WINE i.e., VIVA WINE and Hanover Insurance go up and down completely randomly.
Pair Corralation between VIVA WINE and Hanover Insurance
Assuming the 90 days horizon VIVA WINE GROUP is expected to under-perform the Hanover Insurance. But the stock apears to be less risky and, when comparing its historical volatility, VIVA WINE GROUP is 1.11 times less risky than Hanover Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The The Hanover Insurance is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 13,800 in The Hanover Insurance on August 25, 2024 and sell it today you would earn a total of 1,400 from holding The Hanover Insurance or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. The Hanover Insurance
Performance |
| Timeline |
| VIVA WINE GROUP |
| Hanover Insurance |
VIVA WINE and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and Hanover Insurance
The main advantage of trading using opposite VIVA WINE and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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.The idea behind VIVA WINE GROUP and The Hanover Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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