Correlation Between Hanover Insurance and Simon Property
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Simon Property 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 Simon Property 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 Simon Property Group, you can compare the effects of market volatilities on Hanover Insurance and Simon Property 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 Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Simon Property.
Diversification Opportunities for Hanover Insurance and Simon Property
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanover and Simon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Simon Property go up and down completely randomly.
Pair Corralation between Hanover Insurance and Simon Property
Considering the 90-day investment horizon Hanover Insurance is expected to generate 1.25 times less return on investment than Simon Property. But when comparing it to its historical volatility, The Hanover Insurance is 1.09 times less risky than Simon Property. It trades about 0.1 of its potential returns per unit of risk. Simon Property Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,786 in Simon Property Group on September 3, 2024 and sell it today you would earn a total of 5,574 from holding Simon Property Group or generate 43.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Simon Property Group
Performance |
| Timeline |
| Hanover Insurance |
| Simon Property Group |
Hanover Insurance and Simon Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Simon Property
The main advantage of trading using opposite Hanover Insurance and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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