Correlation Between Hanover Insurance and CREF Inflation
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and CREF Inflation 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 CREF Inflation 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 CREF Inflation Linked Bond, you can compare the effects of market volatilities on Hanover Insurance and CREF Inflation 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 CREF Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and CREF Inflation.
Diversification Opportunities for Hanover Insurance and CREF Inflation
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanover and CREF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and CREF Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREF Inflation Linked 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 CREF Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREF Inflation Linked has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and CREF Inflation go up and down completely randomly.
Pair Corralation between Hanover Insurance and CREF Inflation
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 5.29 times more return on investment than CREF Inflation. However, Hanover Insurance is 5.29 times more volatile than CREF Inflation Linked Bond. It trades about 0.03 of its potential returns per unit of risk. CREF Inflation Linked Bond is currently generating about 0.07 per unit of risk. If you would invest 13,107 in The Hanover Insurance on September 13, 2024 and sell it today you would earn a total of 2,524 from holding The Hanover Insurance or generate 19.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
The Hanover Insurance vs. CREF Inflation Linked Bond
Performance |
| Timeline |
| Hanover Insurance |
| CREF Inflation Linked |
Hanover Insurance and CREF Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and CREF Inflation
The main advantage of trading using opposite Hanover Insurance and CREF Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, CREF Inflation 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 CREF Inflation will offset losses from the drop in CREF Inflation's long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| CREF Inflation vs. Lululemon Athletica | CREF Inflation vs. Sea | CREF Inflation vs. RCS MediaGroup SpA | CREF Inflation vs. Fast Retailing Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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