Correlation Between Hanover Insurance and Atlantic American
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Atlantic American 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 Hanover Insurance and Atlantic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hanover Insurance and Atlantic American, you can compare the effects of market volatilities on Hanover Insurance and Atlantic American 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 Hanover Insurance with a short position of Atlantic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Atlantic American.
Diversification Opportunities for Hanover Insurance and Atlantic American
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Atlantic is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American and Hanover Insurance 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 The Hanover Insurance are associated (or correlated) with Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Atlantic American go up and down completely randomly.
Pair Corralation between Hanover Insurance and Atlantic American
Considering the 90-day investment horizon Hanover Insurance is expected to generate 2.01 times less return on investment than Atlantic American. But when comparing it to its historical volatility, The Hanover Insurance is 1.68 times less risky than Atlantic American. It trades about 0.12 of its potential returns per unit of risk. Atlantic American is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 148.00 in Atlantic American on November 18, 2024 and sell it today you would earn a total of 12.00 from holding Atlantic American or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Atlantic American
Performance |
| Timeline |
| Hanover Insurance |
| Atlantic American |
Hanover Insurance and Atlantic American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Atlantic American
The main advantage of trading using opposite Hanover Insurance and Atlantic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Atlantic American 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 Atlantic American will offset losses from the drop in Atlantic American's long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| Atlantic American vs. CNO Financial Group | Atlantic American vs. MetLife Preferred Stock | Atlantic American vs. FG Annuities Life | Atlantic American vs. Prudential PLC ADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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