Correlation Between Hanover Insurance and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Nomura 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 Nomura 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 Nomura Holdings ADR, you can compare the effects of market volatilities on Hanover Insurance and Nomura 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Nomura Holdings.
Diversification Opportunities for Hanover Insurance and Nomura Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Nomura is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Nomura Holdings go up and down completely randomly.
Pair Corralation between Hanover Insurance and Nomura Holdings
Considering the 90-day investment horizon Hanover Insurance is expected to generate 2.27 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, The Hanover Insurance is 1.39 times less risky than Nomura Holdings. It trades about 0.04 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 357.00 in Nomura Holdings ADR on August 30, 2024 and sell it today you would earn a total of 236.00 from holding Nomura Holdings ADR or generate 66.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Nomura Holdings ADR
Performance |
| Timeline |
| Hanover Insurance |
| Nomura Holdings ADR |
Hanover Insurance and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Nomura Holdings
The main advantage of trading using opposite Hanover Insurance and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Nomura 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 Nomura Holdings will offset losses from the drop in Nomura 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 |
| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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