Correlation Between RELIANCE STEEL and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL 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 RELIANCE STEEL and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELIANCE STEEL AL and The Hanover Insurance, you can compare the effects of market volatilities on RELIANCE STEEL 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 RELIANCE STEEL with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Hanover Insurance.
Diversification Opportunities for RELIANCE STEEL and Hanover Insurance
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RELIANCE and Hanover is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and RELIANCE STEEL 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 RELIANCE STEEL AL 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 RELIANCE STEEL i.e., RELIANCE STEEL and Hanover Insurance go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and Hanover Insurance
Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to under-perform the Hanover Insurance. But the stock apears to be less risky and, when comparing its historical volatility, RELIANCE STEEL AL is 1.16 times less risky than Hanover Insurance. The stock trades about -0.19 of its potential returns per unit of risk. The The Hanover Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,800 in The Hanover Insurance on September 12, 2024 and sell it today you would earn a total of 200.00 from holding The Hanover Insurance or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. The Hanover Insurance
Performance |
| Timeline |
| RELIANCE STEEL AL |
| Hanover Insurance |
RELIANCE STEEL and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and Hanover Insurance
The main advantage of trading using opposite RELIANCE STEEL and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL 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.| RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc | RELIANCE STEEL vs. Apple Inc |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |