Correlation Between Mizuho Financial and HANOVER INSURANCE

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Mizuho Financial 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 Mizuho Financial and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mizuho Financial Group and HANOVER INSURANCE, you can compare the effects of market volatilities on Mizuho Financial 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 Mizuho Financial with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizuho Financial and HANOVER INSURANCE.

Diversification Opportunities for Mizuho Financial and HANOVER INSURANCE

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Mizuho and HANOVER is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Mizuho Financial 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 Mizuho Financial Group 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 Mizuho Financial i.e., Mizuho Financial and HANOVER INSURANCE go up and down completely randomly.

Pair Corralation between Mizuho Financial and HANOVER INSURANCE

Assuming the 90 days trading horizon Mizuho Financial Group is expected to generate 1.39 times more return on investment than HANOVER INSURANCE. However, Mizuho Financial is 1.39 times more volatile than HANOVER INSURANCE. It trades about 0.08 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.03 per unit of risk. If you would invest  216.00  in Mizuho Financial Group on August 29, 2024 and sell it today you would earn a total of  238.00  from holding Mizuho Financial Group or generate 110.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Mizuho Financial Group  vs.  HANOVER INSURANCE

 Performance 
       Timeline  
Mizuho Financial 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.
HANOVER INSURANCE 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HANOVER INSURANCE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mizuho Financial and HANOVER INSURANCE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mizuho Financial and HANOVER INSURANCE

The main advantage of trading using opposite Mizuho Financial and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizuho Financial 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.
The idea behind Mizuho Financial Group and HANOVER INSURANCE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios