Correlation Between Western Acquisition and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Western Acquisition 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 Western Acquisition and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and The Hanover Insurance, you can compare the effects of market volatilities on Western Acquisition 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 Western Acquisition with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Hanover Insurance.
Diversification Opportunities for Western Acquisition and Hanover Insurance
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Hanover is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Hanover Insurance go up and down completely randomly.
Pair Corralation between Western Acquisition and Hanover Insurance
Given the investment horizon of 90 days Western Acquisition is expected to generate 6.76 times less return on investment than Hanover Insurance. In addition to that, Western Acquisition is 1.16 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 0.1 per unit of volatility. If you would invest 12,187 in The Hanover Insurance on August 27, 2024 and sell it today you would earn a total of 4,173 from holding The Hanover Insurance or generate 34.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. The Hanover Insurance
Performance |
| Timeline |
| Western Acquisition |
| Hanover Insurance |
Western Acquisition and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Hanover Insurance
The main advantage of trading using opposite Western Acquisition and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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.| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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