Correlation Between OFFICE DEPOT and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both OFFICE DEPOT 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 OFFICE DEPOT and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFFICE DEPOT and HANOVER INSURANCE, you can compare the effects of market volatilities on OFFICE DEPOT 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 OFFICE DEPOT with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFFICE DEPOT and HANOVER INSURANCE.
Diversification Opportunities for OFFICE DEPOT and HANOVER INSURANCE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between OFFICE and HANOVER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding OFFICE DEPOT and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and OFFICE DEPOT 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 OFFICE DEPOT 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 OFFICE DEPOT i.e., OFFICE DEPOT and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between OFFICE DEPOT and HANOVER INSURANCE
If you would invest 13,417 in HANOVER INSURANCE on September 27, 2024 and sell it today you would earn a total of 1,183 from holding HANOVER INSURANCE or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFFICE DEPOT vs. HANOVER INSURANCE
Performance |
| Timeline |
| OFFICE DEPOT |
| HANOVER INSURANCE |
OFFICE DEPOT and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFFICE DEPOT and HANOVER INSURANCE
The main advantage of trading using opposite OFFICE DEPOT and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFFICE DEPOT 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 OFFICE DEPOT 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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