Correlation Between POWER METALS and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both POWER METALS 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 POWER METALS and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POWER METALS and HANOVER INSURANCE, you can compare the effects of market volatilities on POWER METALS 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 POWER METALS with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWER METALS and HANOVER INSURANCE.
Diversification Opportunities for POWER METALS and HANOVER INSURANCE
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between POWER and HANOVER is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding POWER METALS and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and POWER METALS 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 POWER METALS 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 POWER METALS i.e., POWER METALS and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between POWER METALS and HANOVER INSURANCE
Assuming the 90 days trading horizon POWER METALS is expected to generate 3.69 times more return on investment than HANOVER INSURANCE. However, POWER METALS is 3.69 times more volatile than HANOVER INSURANCE. It trades about 0.06 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.1 per unit of risk. If you would invest 17.00 in POWER METALS on September 4, 2024 and sell it today you would earn a total of 8.00 from holding POWER METALS or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POWER METALS vs. HANOVER INSURANCE
Performance |
| Timeline |
| POWER METALS |
| HANOVER INSURANCE |
POWER METALS and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWER METALS and HANOVER INSURANCE
The main advantage of trading using opposite POWER METALS and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWER METALS 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.| POWER METALS vs. Austevoll Seafood ASA | POWER METALS vs. Food Life Companies | POWER METALS vs. JAPAN TOBACCO UNSPADR12 | POWER METALS vs. AUSNUTRIA DAIRY |
| HANOVER INSURANCE vs. TOTAL GABON | HANOVER INSURANCE vs. Walgreens Boots Alliance | HANOVER INSURANCE vs. Peak Resources Limited |
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.
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