Correlation Between Transportadora and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Transportadora 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 Transportadora and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and The Hanover Insurance, you can compare the effects of market volatilities on Transportadora 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 Transportadora with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Hanover Insurance.
Diversification Opportunities for Transportadora and Hanover Insurance
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Transportadora and Hanover is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Hanover Insurance go up and down completely randomly.
Pair Corralation between Transportadora and Hanover Insurance
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.5 times more return on investment than Hanover Insurance. However, Transportadora is 2.5 times more volatile than The Hanover Insurance. It trades about 0.23 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.21 per unit of risk. If you would invest 1,650 in Transportadora de Gas on August 30, 2024 and sell it today you would earn a total of 1,070 from holding Transportadora de Gas or generate 64.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. The Hanover Insurance
Performance |
| Timeline |
| Transportadora de Gas |
| Hanover Insurance |
Transportadora and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Hanover Insurance
The main advantage of trading using opposite Transportadora and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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.| Transportadora vs. Gladstone Investment | Transportadora vs. Games Workshop Group | Transportadora vs. MGIC INVESTMENT | Transportadora vs. HK Electric Investments |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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