Correlation Between Hanover Insurance and W R
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and W R 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 W R 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 W R Berkley, you can compare the effects of market volatilities on Hanover Insurance and W R 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 W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and W R.
Diversification Opportunities for Hanover Insurance and W R
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and WRB is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and W R go up and down completely randomly.
Pair Corralation between Hanover Insurance and W R
Considering the 90-day investment horizon The Hanover Insurance is expected to generate 1.06 times more return on investment than W R. However, Hanover Insurance is 1.06 times more volatile than W R Berkley. It trades about 0.27 of its potential returns per unit of risk. W R Berkley is currently generating about 0.27 per unit of risk. If you would invest 14,915 in The Hanover Insurance on August 27, 2024 and sell it today you would earn a total of 1,258 from holding The Hanover Insurance or generate 8.43% 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. W R Berkley
Performance |
| Timeline |
| Hanover Insurance |
| W R Berkley |
Hanover Insurance and W R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and W R
The main advantage of trading using opposite Hanover Insurance and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, W R 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 W R will offset losses from the drop in W R's long position.| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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