Correlation Between Hanover Insurance and Independence Realty
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Independence Realty 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 Independence Realty 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 Independence Realty Trust, you can compare the effects of market volatilities on Hanover Insurance and Independence Realty 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Independence Realty.
Diversification Opportunities for Hanover Insurance and Independence Realty
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Independence is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Independence Realty go up and down completely randomly.
Pair Corralation between Hanover Insurance and Independence Realty
Considering the 90-day investment horizon Hanover Insurance is expected to generate 1.59 times less return on investment than Independence Realty. But when comparing it to its historical volatility, The Hanover Insurance is 1.26 times less risky than Independence Realty. It trades about 0.1 of its potential returns per unit of risk. Independence Realty Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,361 in Independence Realty Trust on August 27, 2024 and sell it today you would earn a total of 814.00 from holding Independence Realty Trust or generate 59.81% 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. Independence Realty Trust
Performance |
| Timeline |
| Hanover Insurance |
| Independence Realty Trust |
Hanover Insurance and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Independence Realty
The main advantage of trading using opposite Hanover Insurance and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Independence Realty 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 Independence Realty will offset losses from the drop in Independence Realty's long position.| Hanover Insurance vs. Fiverr International | Hanover Insurance vs. Pinterest | Hanover Insurance vs. Upstart Holdings | Hanover Insurance vs. Fastly Inc |
| Independence Realty vs. Essex Property Trust | Independence Realty vs. Mid America Apartment Communities | Independence Realty vs. Nexpoint Residential Trust |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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