Correlation Between Hanover Insurance and BRP
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on Hanover Insurance and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and BRP.
Diversification Opportunities for Hanover Insurance and BRP
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanover and BRP is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and BRP go up and down completely randomly.
Pair Corralation between Hanover Insurance and BRP
Considering the 90-day investment horizon The Hanover Insurance is expected to under-perform the BRP. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 2.6 times less risky than BRP. The stock trades about -0.23 of its potential returns per unit of risk. The BRP Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,813 in BRP Inc on September 13, 2024 and sell it today you would earn a total of 462.00 from holding BRP Inc or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. BRP Inc
Performance |
| Timeline |
| Hanover Insurance |
| BRP Inc |
Hanover Insurance and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and BRP
The main advantage of trading using opposite Hanover Insurance and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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