Correlation Between Playtech Plc and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and The Hanover Insurance, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Hanover Insurance.
Diversification Opportunities for Playtech Plc and Hanover Insurance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playtech and Hanover is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Hanover Insurance go up and down completely randomly.
Pair Corralation between Playtech Plc and Hanover Insurance
Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.64 times less return on investment than Hanover Insurance. In addition to that, Playtech Plc is 1.42 times more volatile than The Hanover Insurance. It trades about 0.04 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.09 per unit of volatility. If you would invest 10,332 in The Hanover Insurance on August 31, 2024 and sell it today you would earn a total of 5,468 from holding The Hanover Insurance or generate 52.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Playtech plc vs. The Hanover Insurance
Performance |
| Timeline |
| Playtech plc |
| Hanover Insurance |
Playtech Plc and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Hanover Insurance
The main advantage of trading using opposite Playtech Plc and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. MAVEN WIRELESS SWEDEN | Playtech Plc vs. Tri Pointe Homes | Playtech Plc vs. Gol Intelligent Airlines | Playtech Plc vs. American Airlines Group |
| Hanover Insurance vs. Pentair plc | Hanover Insurance vs. AIR LIQUIDE ADR | Hanover Insurance vs. Norwegian Air Shuttle | Hanover Insurance vs. Computer And Technologies |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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