Correlation Between Walgreens Boots and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots 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 Walgreens Boots and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walgreens Boots Alliance and HANOVER INSURANCE, you can compare the effects of market volatilities on Walgreens Boots 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 Walgreens Boots with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and HANOVER INSURANCE.
Diversification Opportunities for Walgreens Boots and HANOVER INSURANCE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walgreens and HANOVER is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Walgreens Boots 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 Walgreens Boots Alliance 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 Walgreens Boots i.e., Walgreens Boots and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Walgreens Boots and HANOVER INSURANCE
Assuming the 90 days trading horizon Walgreens Boots Alliance is expected to generate 2.26 times more return on investment than HANOVER INSURANCE. However, Walgreens Boots is 2.26 times more volatile than HANOVER INSURANCE. It trades about 0.03 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.05 per unit of risk. If you would invest 825.00 in Walgreens Boots Alliance on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Walgreens Boots Alliance or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. HANOVER INSURANCE
Performance |
| Timeline |
| Walgreens Boots Alliance |
| HANOVER INSURANCE |
Walgreens Boots and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and HANOVER INSURANCE
The main advantage of trading using opposite Walgreens Boots and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots 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.| Walgreens Boots vs. HANOVER INSURANCE | Walgreens Boots vs. INSURANCE AUST GRP | Walgreens Boots vs. REVO INSURANCE SPA | Walgreens Boots vs. United Insurance Holdings |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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