Correlation Between Mills Music and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Mills Music 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 Mills Music and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mills Music Trust and The Hanover Insurance, you can compare the effects of market volatilities on Mills Music 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 Mills Music with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mills Music and Hanover Insurance.
Diversification Opportunities for Mills Music and Hanover Insurance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mills and Hanover is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mills Music Trust and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Mills Music 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 Mills Music Trust 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 Mills Music i.e., Mills Music and Hanover Insurance go up and down completely randomly.
Pair Corralation between Mills Music and Hanover Insurance
Assuming the 90 days horizon Mills Music Trust is expected to generate 3.32 times more return on investment than Hanover Insurance. However, Mills Music is 3.32 times more volatile than The Hanover Insurance. It trades about 0.02 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 4,228 in Mills Music Trust on August 30, 2024 and sell it today you would lose (381.00) from holding Mills Music Trust or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.32% |
| Values | Daily Returns |
Mills Music Trust vs. The Hanover Insurance
Performance |
| Timeline |
| Mills Music Trust |
| Hanover Insurance |
Mills Music and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mills Music and Hanover Insurance
The main advantage of trading using opposite Mills Music and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mills Music 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.| Mills Music vs. Citrine Global Corp | Mills Music vs. Blue Water Ventures | Mills Music vs. DATA Communications Management | Mills Music vs. Aramark Holdings |
| Hanover Insurance vs. Axa Equitable Holdings | Hanover Insurance vs. American International Group | Hanover Insurance vs. Arch Capital Group | Hanover Insurance vs. Sun Life Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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