Correlation Between SCANSOURCE (SC3SG) and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and HANOVER INSURANCE, you can compare the effects of market volatilities on SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE (SC3SG) and HANOVER INSURANCE.
Diversification Opportunities for SCANSOURCE (SC3SG) and HANOVER INSURANCE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCANSOURCE and HANOVER is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and SCANSOURCE (SC3SG) 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 SCANSOURCE 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 SCANSOURCE (SC3SG) i.e., SCANSOURCE (SC3SG) and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between SCANSOURCE (SC3SG) and HANOVER INSURANCE
Assuming the 90 days trading horizon SCANSOURCE (SC3SG) is expected to generate 2.93 times less return on investment than HANOVER INSURANCE. In addition to that, SCANSOURCE (SC3SG) is 1.76 times more volatile than HANOVER INSURANCE. It trades about 0.02 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.08 per unit of volatility. If you would invest 11,858 in HANOVER INSURANCE on November 7, 2024 and sell it today you would earn a total of 2,842 from holding HANOVER INSURANCE or generate 23.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANSOURCE vs. HANOVER INSURANCE
Performance |
| Timeline |
| SCANSOURCE (SC3SG) |
| HANOVER INSURANCE |
SCANSOURCE (SC3SG) and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE (SC3SG) and HANOVER INSURANCE
The main advantage of trading using opposite SCANSOURCE (SC3SG) and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE (SC3SG) 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.| SCANSOURCE (SC3SG) vs. NXP Semiconductors NV | SCANSOURCE (SC3SG) vs. US Physical Therapy | SCANSOURCE (SC3SG) vs. Easy Software AG | SCANSOURCE (SC3SG) vs. Semiconductor Manufacturing International |
| HANOVER INSURANCE vs. AUST AGRICULTURAL | HANOVER INSURANCE vs. Suntory Beverage Food | HANOVER INSURANCE vs. PREMIER FOODS | HANOVER INSURANCE vs. Tyson Foods |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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