Correlation Between American Financial and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both American 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 American 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 American Financial Group and The Hanover Insurance, you can compare the effects of market volatilities on American 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 American Financial with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Hanover Insurance.
Diversification Opportunities for American Financial and Hanover Insurance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Hanover is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and American 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 American 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 American Financial i.e., American Financial and Hanover Insurance go up and down completely randomly.
Pair Corralation between American Financial and Hanover Insurance
If you would invest 13,700 in The Hanover Insurance on September 1, 2024 and sell it today you would earn a total of 2,100 from holding The Hanover Insurance or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
American Financial Group vs. The Hanover Insurance
Performance |
| Timeline |
| American Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hanover Insurance |
American Financial and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Hanover Insurance
The main advantage of trading using opposite American Financial and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American 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.| American Financial vs. Suntory Beverage Food | American Financial vs. MELIA HOTELS | American Financial vs. THAI BEVERAGE | American Financial vs. United Breweries Co |
| Hanover Insurance vs. National Beverage Corp | Hanover Insurance vs. United Breweries Co | Hanover Insurance vs. Sabra Health Care | Hanover Insurance vs. Clearside Biomedical |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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