Correlation Between Mercury General and Horace Mann
Can any of the company-specific risk be diversified away by investing in both Mercury General and Horace Mann 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 Mercury General and Horace Mann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury General and Horace Mann Educators, you can compare the effects of market volatilities on Mercury General and Horace Mann 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 Mercury General with a short position of Horace Mann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury General and Horace Mann.
Diversification Opportunities for Mercury General and Horace Mann
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mercury and Horace is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mercury General and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and Mercury General 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 Mercury General are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of Mercury General i.e., Mercury General and Horace Mann go up and down completely randomly.
Pair Corralation between Mercury General and Horace Mann
Considering the 90-day investment horizon Mercury General is expected to generate 1.07 times more return on investment than Horace Mann. However, Mercury General is 1.07 times more volatile than Horace Mann Educators. It trades about 0.25 of its potential returns per unit of risk. Horace Mann Educators is currently generating about 0.19 per unit of risk. If you would invest 6,784 in Mercury General on August 27, 2024 and sell it today you would earn a total of 993.00 from holding Mercury General or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury General vs. Horace Mann Educators
Performance |
| Timeline |
| Mercury General |
| Horace Mann Educators |
Mercury General and Horace Mann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury General and Horace Mann
The main advantage of trading using opposite Mercury General and Horace Mann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury General position performs unexpectedly, Horace Mann 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 Horace Mann will offset losses from the drop in Horace Mann's long position.| Mercury General vs. Selective Insurance Group | Mercury General vs. Kemper | Mercury General vs. Donegal Group B | Mercury General vs. Argo Group International |
| Horace Mann vs. Kemper | Horace Mann vs. RLI Corp | Horace Mann vs. Global Indemnity PLC | Horace Mann vs. Argo Group International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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