Correlation Between Hanover Insurance and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Hanover Insurance and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Tower Semiconductor.
Diversification Opportunities for Hanover Insurance and Tower Semiconductor
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Tower is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Hanover Insurance and Tower Semiconductor
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.68 times more return on investment than Tower Semiconductor. However, The Hanover Insurance is 1.47 times less risky than Tower Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.02 per unit of risk. If you would invest 13,509 in The Hanover Insurance on August 24, 2024 and sell it today you would earn a total of 2,851 from holding The Hanover Insurance or generate 21.1% 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. Tower Semiconductor
Performance |
| Timeline |
| Hanover Insurance |
| Tower Semiconductor |
Hanover Insurance and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Tower Semiconductor
The main advantage of trading using opposite Hanover Insurance and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |