Correlation Between MGIC Investment and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both MGIC Investment 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 MGIC Investment and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment Corp and The Hanover Insurance, you can compare the effects of market volatilities on MGIC Investment 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 MGIC Investment with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Hanover Insurance.
Diversification Opportunities for MGIC Investment and Hanover Insurance
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between MGIC and Hanover is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and MGIC Investment 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 MGIC Investment Corp 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 MGIC Investment i.e., MGIC Investment and Hanover Insurance go up and down completely randomly.
Pair Corralation between MGIC Investment and Hanover Insurance
Considering the 90-day investment horizon MGIC Investment is expected to generate 1.12 times less return on investment than Hanover Insurance. In addition to that, MGIC Investment is 1.13 times more volatile than The Hanover Insurance. It trades about 0.13 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.16 per unit of volatility. If you would invest 12,721 in The Hanover Insurance on September 2, 2024 and sell it today you would earn a total of 3,780 from holding The Hanover Insurance or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. The Hanover Insurance
Performance |
| Timeline |
| MGIC Investment Corp |
| Hanover Insurance |
MGIC Investment and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Hanover Insurance
The main advantage of trading using opposite MGIC Investment and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment 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.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
| Hanover Insurance vs. Selective Insurance Group | Hanover Insurance vs. Aquagold International | Hanover Insurance vs. Thrivent High Yield | Hanover Insurance vs. Morningstar Unconstrained Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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