Correlation Between Tower Semiconductor and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Hanover Insurance 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 Tower Semiconductor and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and The Hanover Insurance, you can compare the effects of market volatilities on Tower Semiconductor and Hanover Insurance 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 Tower Semiconductor with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Hanover Insurance.
Diversification Opportunities for Tower Semiconductor and Hanover Insurance
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tower and Hanover is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Tower Semiconductor 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 Tower Semiconductor are associated (or correlated) with Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Hanover Insurance go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Hanover Insurance
Given the investment horizon of 90 days Tower Semiconductor is expected to generate 1.07 times less return on investment than Hanover Insurance. In addition to that, Tower Semiconductor is 2.84 times more volatile than The Hanover Insurance. It trades about 0.09 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.26 per unit of volatility. If you would invest 14,915 in The Hanover Insurance on August 28, 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 | 95.45% |
| Values | Daily Returns |
Tower Semiconductor vs. The Hanover Insurance
Performance |
| Timeline |
| Tower Semiconductor |
| Hanover Insurance |
Tower Semiconductor and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Hanover Insurance
The main advantage of trading using opposite Tower Semiconductor and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
| Hanover Insurance vs. Fiverr International | Hanover Insurance vs. Pinterest | Hanover Insurance vs. Upstart Holdings | Hanover Insurance vs. Fastly 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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