Correlation Between NioCorp Developments and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments 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 NioCorp Developments and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and The Hanover Insurance, you can compare the effects of market volatilities on NioCorp Developments 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 NioCorp Developments with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Hanover Insurance.
Diversification Opportunities for NioCorp Developments and Hanover Insurance
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NioCorp and Hanover is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and NioCorp Developments 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 NioCorp Developments Ltd 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 NioCorp Developments i.e., NioCorp Developments and Hanover Insurance go up and down completely randomly.
Pair Corralation between NioCorp Developments and Hanover Insurance
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Hanover Insurance. In addition to that, NioCorp Developments is 2.93 times more volatile than The Hanover Insurance. It trades about -0.37 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.39 per unit of volatility. If you would invest 14,833 in The Hanover Insurance on September 1, 2024 and sell it today you would earn a total of 1,668 from holding The Hanover Insurance or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. The Hanover Insurance
Performance |
| Timeline |
| NioCorp Developments |
| Hanover Insurance |
NioCorp Developments and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Hanover Insurance
The main advantage of trading using opposite NioCorp Developments and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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.| NioCorp Developments vs. Paiute Oil Mining | NioCorp Developments vs. Marfrig Global Foods | NioCorp Developments vs. Emerson Radio | NioCorp Developments vs. Reservoir Media |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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