Correlation Between Hanover Insurance and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Hanover Insurance and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Arrow Electronics.
Diversification Opportunities for Hanover Insurance and Arrow Electronics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanover and Arrow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Arrow Electronics go up and down completely randomly.
Pair Corralation between Hanover Insurance and Arrow Electronics
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.83 times more return on investment than Arrow Electronics. However, The Hanover Insurance is 1.21 times less risky than Arrow Electronics. It trades about 0.03 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.02 per unit of risk. If you would invest 13,846 in The Hanover Insurance on August 23, 2024 and sell it today you would earn a total of 2,428 from holding The Hanover Insurance or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Arrow Electronics
Performance |
| Timeline |
| Hanover Insurance |
| Arrow Electronics |
Hanover Insurance and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Arrow Electronics
The main advantage of trading using opposite Hanover Insurance and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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