Correlation Between MARKET VECTR and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both MARKET VECTR 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 MARKET VECTR and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MARKET VECTR RETAIL and The Hanover Insurance, you can compare the effects of market volatilities on MARKET VECTR 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 MARKET VECTR with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and Hanover Insurance.
Diversification Opportunities for MARKET VECTR and Hanover Insurance
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MARKET and Hanover is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and MARKET VECTR 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 MARKET VECTR RETAIL 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 MARKET VECTR i.e., MARKET VECTR and Hanover Insurance go up and down completely randomly.
Pair Corralation between MARKET VECTR and Hanover Insurance
Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to generate 0.52 times more return on investment than Hanover Insurance. However, MARKET VECTR RETAIL is 1.92 times less risky than Hanover Insurance. It trades about 0.23 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 21,010 in MARKET VECTR RETAIL on November 7, 2024 and sell it today you would earn a total of 2,305 from holding MARKET VECTR RETAIL or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MARKET VECTR RETAIL vs. The Hanover Insurance
Performance |
| Timeline |
| MARKET VECTR RETAIL |
| Hanover Insurance |
MARKET VECTR and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MARKET VECTR and Hanover Insurance
The main advantage of trading using opposite MARKET VECTR and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MARKET VECTR 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.| MARKET VECTR vs. New Residential Investment | MARKET VECTR vs. Scottish Mortgage Investment | MARKET VECTR vs. North American Construction | MARKET VECTR vs. PennantPark Investment |
| Hanover Insurance vs. Siamgas And Petrochemicals | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. EITZEN CHEMICALS | Hanover Insurance vs. MOLSON RS BEVERAGE |
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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