Correlation Between Hanover Insurance and Sapiens International
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Sapiens International 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 Sapiens International 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 Sapiens International, you can compare the effects of market volatilities on Hanover Insurance and Sapiens International 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 Sapiens International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Sapiens International.
Diversification Opportunities for Hanover Insurance and Sapiens International
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanover and Sapiens is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Sapiens International go up and down completely randomly.
Pair Corralation between Hanover Insurance and Sapiens International
Considering the 90-day investment horizon The Hanover Insurance is expected to under-perform the Sapiens International. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 1.31 times less risky than Sapiens International. The stock trades about -0.17 of its potential returns per unit of risk. The Sapiens International is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,910 in Sapiens International on September 12, 2024 and sell it today you would lose (99.00) from holding Sapiens International or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. Sapiens International
Performance |
| Timeline |
| Hanover Insurance |
| Sapiens International |
Hanover Insurance and Sapiens International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Sapiens International
The main advantage of trading using opposite Hanover Insurance and Sapiens International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Sapiens International 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 Sapiens International will offset losses from the drop in Sapiens International's long position.| Hanover Insurance vs. Aeye Inc | Hanover Insurance vs. Ep Emerging Markets | Hanover Insurance vs. LiCycle Holdings Corp | Hanover Insurance vs. SEI Investments |
| Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions | Sapiens International vs. ePlus inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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