Correlation Between THORNEY TECHS and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS 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 THORNEY TECHS and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and The Hanover Insurance, you can compare the effects of market volatilities on THORNEY TECHS 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 THORNEY TECHS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and Hanover Insurance.
Diversification Opportunities for THORNEY TECHS and Hanover Insurance
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THORNEY and Hanover is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and THORNEY TECHS 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 THORNEY TECHS LTD 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 THORNEY TECHS i.e., THORNEY TECHS and Hanover Insurance go up and down completely randomly.
Pair Corralation between THORNEY TECHS and Hanover Insurance
Assuming the 90 days horizon THORNEY TECHS is expected to generate 1.94 times less return on investment than Hanover Insurance. In addition to that, THORNEY TECHS is 3.59 times more volatile than The Hanover Insurance. It trades about 0.01 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.09 per unit of volatility. If you would invest 10,866 in The Hanover Insurance on September 12, 2024 and sell it today you would earn a total of 3,934 from holding The Hanover Insurance or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. The Hanover Insurance
Performance |
| Timeline |
| THORNEY TECHS LTD |
| Hanover Insurance |
THORNEY TECHS and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and Hanover Insurance
The main advantage of trading using opposite THORNEY TECHS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS 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.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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