Correlation Between Molina Healthcare and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare 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 Molina Healthcare and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and The Hanover Insurance, you can compare the effects of market volatilities on Molina Healthcare 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 Molina Healthcare with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Hanover Insurance.
Diversification Opportunities for Molina Healthcare and Hanover Insurance
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Molina and Hanover is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare i.e., Molina Healthcare and Hanover Insurance go up and down completely randomly.
Pair Corralation between Molina Healthcare and Hanover Insurance
Considering the 90-day investment horizon Molina Healthcare is expected to generate 1.28 times more return on investment than Hanover Insurance. However, Molina Healthcare is 1.28 times more volatile than The Hanover Insurance. It trades about 0.19 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.02 per unit of risk. If you would invest 28,724 in Molina Healthcare on November 3, 2024 and sell it today you would earn a total of 2,317 from holding Molina Healthcare or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Molina Healthcare vs. The Hanover Insurance
Performance |
| Timeline |
| Molina Healthcare |
| Hanover Insurance |
Molina Healthcare and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Hanover Insurance
The main advantage of trading using opposite Molina Healthcare and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare 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.| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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