Correlation Between 343498AC5 and Hanover Insurance

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Can any of the company-specific risk be diversified away by investing in both 343498AC5 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 343498AC5 and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLO 24 15 MAR 31 and The Hanover Insurance, you can compare the effects of market volatilities on 343498AC5 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 343498AC5 with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of 343498AC5 and Hanover Insurance.

Diversification Opportunities for 343498AC5 and Hanover Insurance

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 343498AC5 and Hanover is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FLO 24 15 MAR 31 and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and 343498AC5 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 FLO 24 15 MAR 31 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 343498AC5 i.e., 343498AC5 and Hanover Insurance go up and down completely randomly.

Pair Corralation between 343498AC5 and Hanover Insurance

Assuming the 90 days trading horizon 343498AC5 is expected to generate 8.55 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, FLO 24 15 MAR 31 is 1.19 times less risky than Hanover Insurance. It trades about 0.01 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12,463  in The Hanover Insurance on September 5, 2024 and sell it today you would earn a total of  3,952  from holding The Hanover Insurance or generate 31.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy91.53%
ValuesDaily Returns

FLO 24 15 MAR 31  vs.  The Hanover Insurance

 Performance 
       Timeline  
FLO 24 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FLO 24 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 343498AC5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hanover Insurance 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

343498AC5 and Hanover Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 343498AC5 and Hanover Insurance

The main advantage of trading using opposite 343498AC5 and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 343498AC5 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.
The idea behind FLO 24 15 MAR 31 and The Hanover Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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