Correlation Between Tokio Marine and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Tokio Marine 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 Tokio Marine and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokio Marine Holdings and The Hanover Insurance, you can compare the effects of market volatilities on Tokio Marine 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 Tokio Marine with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokio Marine and Hanover Insurance.
Diversification Opportunities for Tokio Marine and Hanover Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tokio and Hanover is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tokio Marine Holdings and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Tokio Marine 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 Tokio Marine Holdings 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 Tokio Marine i.e., Tokio Marine and Hanover Insurance go up and down completely randomly.
Pair Corralation between Tokio Marine and Hanover Insurance
Assuming the 90 days horizon Tokio Marine is expected to generate 2.75 times less return on investment than Hanover Insurance. In addition to that, Tokio Marine is 1.5 times more volatile than The Hanover Insurance. It trades about 0.06 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.26 per unit of volatility. If you would invest 12,020 in The Hanover Insurance on August 28, 2024 and sell it today you would earn a total of 3,480 from holding The Hanover Insurance or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokio Marine Holdings vs. The Hanover Insurance
Performance |
| Timeline |
| Tokio Marine Holdings |
| Hanover Insurance |
Tokio Marine and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokio Marine and Hanover Insurance
The main advantage of trading using opposite Tokio Marine and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokio Marine 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.| Tokio Marine vs. AECOM TECHNOLOGY | Tokio Marine vs. Jacquet Metal Service | Tokio Marine vs. FANDIFI TECHNOLOGY P | Tokio Marine vs. Amkor Technology |
| Hanover Insurance vs. Samsung Electronics Co | Hanover Insurance vs. Corporate Office Properties | Hanover Insurance vs. ARROW ELECTRONICS | Hanover Insurance vs. KENEDIX OFFICE INV |
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.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |