Correlation Between Hanover Insurance and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and MGIC Investment 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 MGIC Investment 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 MGIC Investment Corp, you can compare the effects of market volatilities on Hanover Insurance and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and MGIC Investment.
Diversification Opportunities for Hanover Insurance and MGIC Investment
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanover and MGIC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and MGIC Investment go up and down completely randomly.
Pair Corralation between Hanover Insurance and MGIC Investment
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.89 times more return on investment than MGIC Investment. However, The Hanover Insurance is 1.13 times less risky than MGIC Investment. It trades about 0.16 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.13 per unit of risk. If you would invest 12,721 in The Hanover Insurance on September 2, 2024 and sell it today you would earn a total of 3,780 from holding The Hanover Insurance or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. MGIC Investment Corp
Performance |
| Timeline |
| Hanover Insurance |
| MGIC Investment Corp |
Hanover Insurance and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and MGIC Investment
The main advantage of trading using opposite Hanover Insurance and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| Hanover Insurance vs. Selective Insurance Group | Hanover Insurance vs. Aquagold International | Hanover Insurance vs. Thrivent High Yield | Hanover Insurance vs. Morningstar Unconstrained Allocation |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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