Correlation Between Hanover Insurance and Amentum Holdings
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Amentum Holdings 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 Amentum Holdings 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 Amentum Holdings, you can compare the effects of market volatilities on Hanover Insurance and Amentum Holdings 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 Amentum Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Amentum Holdings.
Diversification Opportunities for Hanover Insurance and Amentum Holdings
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanover and Amentum is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Amentum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amentum Holdings 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 Amentum Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amentum Holdings has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Amentum Holdings go up and down completely randomly.
Pair Corralation between Hanover Insurance and Amentum Holdings
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.23 times more return on investment than Amentum Holdings. However, The Hanover Insurance is 4.44 times less risky than Amentum Holdings. It trades about -0.17 of its potential returns per unit of risk. Amentum Holdings is currently generating about -0.29 per unit of risk. If you would invest 16,255 in The Hanover Insurance on September 12, 2024 and sell it today you would lose (624.00) from holding The Hanover Insurance or give up 3.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Amentum Holdings
Performance |
| Timeline |
| Hanover Insurance |
| Amentum Holdings |
Hanover Insurance and Amentum Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Amentum Holdings
The main advantage of trading using opposite Hanover Insurance and Amentum Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Amentum Holdings 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 Amentum Holdings will offset losses from the drop in Amentum Holdings' long position.| Hanover Insurance vs. Aeye Inc | Hanover Insurance vs. Ep Emerging Markets | Hanover Insurance vs. LiCycle Holdings Corp | Hanover Insurance vs. SEI Investments |
| Amentum Holdings vs. Flexible Solutions International | Amentum Holdings vs. Olympic Steel | Amentum Holdings vs. Harmony Gold Mining | Amentum Holdings vs. National Beverage Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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