Correlation Between REINET INVESTMENTS and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS 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 REINET INVESTMENTS and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and The Hanover Insurance, you can compare the effects of market volatilities on REINET INVESTMENTS 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 REINET INVESTMENTS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and Hanover Insurance.
Diversification Opportunities for REINET INVESTMENTS and Hanover Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REINET and Hanover is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and Hanover Insurance go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and Hanover Insurance
Assuming the 90 days horizon REINET INVESTMENTS is expected to generate 3.12 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, REINET INVESTMENTS SCA is 1.16 times less risky than Hanover Insurance. It trades about 0.14 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 13,600 in The Hanover Insurance on August 29, 2024 and sell it today you would earn a total of 1,900 from holding The Hanover Insurance or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. The Hanover Insurance
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| Hanover Insurance |
REINET INVESTMENTS and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and Hanover Insurance
The main advantage of trading using opposite REINET INVESTMENTS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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.| REINET INVESTMENTS vs. BlackRock | REINET INVESTMENTS vs. Ares Management Corp | REINET INVESTMENTS vs. Northern Trust |
| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Beazley PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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