Correlation Between Hanover Insurance and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Meliá Hotels 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 Meliá Hotels 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 Meli Hotels International, you can compare the effects of market volatilities on Hanover Insurance and Meliá Hotels 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 Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Meliá Hotels.
Diversification Opportunities for Hanover Insurance and Meliá Hotels
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Meliá is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International 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 Meliá Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Meliá Hotels go up and down completely randomly.
Pair Corralation between Hanover Insurance and Meliá Hotels
If you would invest 14,714 in The Hanover Insurance on September 4, 2024 and sell it today you would earn a total of 1,538 from holding The Hanover Insurance or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Hanover Insurance vs. Meli Hotels International
Performance |
| Timeline |
| Hanover Insurance |
| Meli Hotels International |
Hanover Insurance and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Meliá Hotels
The main advantage of trading using opposite Hanover Insurance and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Meliá Hotels 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| Meliá Hotels vs. Skillful Craftsman Education | Meliá Hotels vs. BJs Restaurants | Meliá Hotels vs. Cracker Barrel Old | Meliá Hotels vs. Sphere Entertainment 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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