Correlation Between George Weston and Hannover
Can any of the company-specific risk be diversified away by investing in both George Weston and Hannover 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 George Weston and Hannover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Weston Limited and Hannover Re, you can compare the effects of market volatilities on George Weston and Hannover 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 George Weston with a short position of Hannover. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Hannover.
Diversification Opportunities for George Weston and Hannover
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between George and Hannover is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Hannover Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Re and George Weston 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 George Weston Limited are associated (or correlated) with Hannover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Re has no effect on the direction of George Weston i.e., George Weston and Hannover go up and down completely randomly.
Pair Corralation between George Weston and Hannover
Assuming the 90 days horizon George Weston Limited is expected to generate 0.81 times more return on investment than Hannover. However, George Weston Limited is 1.23 times less risky than Hannover. It trades about 0.14 of its potential returns per unit of risk. Hannover Re is currently generating about 0.05 per unit of risk. If you would invest 11,802 in George Weston Limited on September 3, 2024 and sell it today you would earn a total of 3,981 from holding George Weston Limited or generate 33.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.71% |
| Values | Daily Returns |
George Weston Limited vs. Hannover Re
Performance |
| Timeline |
| George Weston Limited |
| Hannover Re |
George Weston and Hannover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Weston and Hannover
The main advantage of trading using opposite George Weston and Hannover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Weston position performs unexpectedly, Hannover 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 Hannover will offset losses from the drop in Hannover's long position.| George Weston vs. Village Super Market | George Weston vs. Ingles Markets Incorporated | George Weston vs. Natural Grocers by | George Weston vs. Grocery Outlet Holding |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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