Correlation Between Hanover Insurance and Waste Management
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Hanover Insurance and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Waste Management.
Diversification Opportunities for Hanover Insurance and Waste Management
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Waste is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Waste Management go up and down completely randomly.
Pair Corralation between Hanover Insurance and Waste Management
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 1.0 times more return on investment than Waste Management. However, The Hanover Insurance is 1.0 times less risky than Waste Management. It trades about 0.29 of its potential returns per unit of risk. Waste Management is currently generating about 0.28 per unit of risk. If you would invest 14,915 in The Hanover Insurance on August 29, 2024 and sell it today you would earn a total of 1,389 from holding The Hanover Insurance or generate 9.31% 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. Waste Management
Performance |
| Timeline |
| Hanover Insurance |
| Waste Management |
Hanover Insurance and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Waste Management
The main advantage of trading using opposite Hanover Insurance and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Hanover Insurance vs. Fiverr International | Hanover Insurance vs. Pinterest | Hanover Insurance vs. Upstart Holdings | Hanover Insurance vs. Fastly Inc |
| Waste Management vs. Genpact Limited | Waste Management vs. Broadridge Financial Solutions | Waste Management vs. First Advantage Corp | Waste Management vs. Franklin Covey |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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