Correlation Between Singapore Reinsurance and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Singapore Reinsurance 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 Singapore Reinsurance and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Reinsurance and The Hanover Insurance, you can compare the effects of market volatilities on Singapore Reinsurance 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 Singapore Reinsurance with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Reinsurance and Hanover Insurance.
Diversification Opportunities for Singapore Reinsurance and Hanover Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Singapore and Hanover is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance i.e., Singapore Reinsurance and Hanover Insurance go up and down completely randomly.
Pair Corralation between Singapore Reinsurance and Hanover Insurance
Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 1.55 times less return on investment than Hanover Insurance. In addition to that, Singapore Reinsurance is 1.64 times more volatile than The Hanover Insurance. It trades about 0.08 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.21 per unit of volatility. If you would invest 12,716 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 2,684 from holding The Hanover Insurance or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Reinsurance vs. The Hanover Insurance
Performance |
| Timeline |
| Singapore Reinsurance |
| Hanover Insurance |
Singapore Reinsurance and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Reinsurance and Hanover Insurance
The main advantage of trading using opposite Singapore Reinsurance and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Reinsurance 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.| Singapore Reinsurance vs. ScanSource | Singapore Reinsurance vs. TYSON FOODS A | Singapore Reinsurance vs. ULTRA CLEAN HLDGS | Singapore Reinsurance vs. Cleanaway Waste Management |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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