Correlation Between Hanover Insurance and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and ICC 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 ICC 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 ICC Holdings, you can compare the effects of market volatilities on Hanover Insurance and ICC 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 ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and ICC Holdings.
Diversification Opportunities for Hanover Insurance and ICC Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and ICC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and ICC Holdings go up and down completely randomly.
Pair Corralation between Hanover Insurance and ICC Holdings
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 2.78 times more return on investment than ICC Holdings. However, Hanover Insurance is 2.78 times more volatile than ICC Holdings. It trades about 0.32 of its potential returns per unit of risk. ICC Holdings is currently generating about -0.02 per unit of risk. If you would invest 14,834 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 1,593 from holding The Hanover Insurance or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
The Hanover Insurance vs. ICC Holdings
Performance |
| Timeline |
| Hanover Insurance |
| ICC Holdings |
Hanover Insurance and ICC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and ICC Holdings
The main advantage of trading using opposite Hanover Insurance and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, ICC 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 ICC Holdings will offset losses from the drop in ICC Holdings' long position.| Hanover Insurance vs. Axa Equitable Holdings | Hanover Insurance vs. American International Group | Hanover Insurance vs. Arch Capital Group | Hanover Insurance vs. Sun Life Financial |
| ICC Holdings vs. AMERISAFE | ICC Holdings vs. NMI Holdings | ICC Holdings vs. Investors Title | ICC Holdings vs. Essent Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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