Correlation Between Simon Property and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Simon Property 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 Simon Property and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and The Hanover Insurance, you can compare the effects of market volatilities on Simon Property 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 Simon Property with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Hanover Insurance.
Diversification Opportunities for Simon Property and Hanover Insurance
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simon and Hanover is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property 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 Simon Property 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 Simon Property 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 Simon Property i.e., Simon Property and Hanover Insurance go up and down completely randomly.
Pair Corralation between Simon Property and Hanover Insurance
Considering the 90-day investment horizon Simon Property is expected to generate 1.79 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, Simon Property Group is 1.46 times less risky than Hanover Insurance. It trades about 0.36 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 14,714 in The Hanover Insurance on September 3, 2024 and sell it today you would earn a total of 1,787 from holding The Hanover Insurance or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. The Hanover Insurance
Performance |
| Timeline |
| Simon Property Group |
| Hanover Insurance |
Simon Property and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Hanover Insurance
The main advantage of trading using opposite Simon Property and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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