Correlation Between SLR Investment and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and The Hanover Insurance, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Hanover Insurance.
Diversification Opportunities for SLR Investment and Hanover Insurance
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SLR and Hanover is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Hanover Insurance go up and down completely randomly.
Pair Corralation between SLR Investment and Hanover Insurance
Assuming the 90 days horizon SLR Investment Corp is expected to generate 1.07 times more return on investment than Hanover Insurance. However, SLR Investment is 1.07 times more volatile than The Hanover Insurance. It trades about 0.17 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.09 per unit of risk. If you would invest 1,375 in SLR Investment Corp on September 22, 2024 and sell it today you would earn a total of 166.00 from holding SLR Investment Corp or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. The Hanover Insurance
Performance |
| Timeline |
| SLR Investment Corp |
| Hanover Insurance |
SLR Investment and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and Hanover Insurance
The main advantage of trading using opposite SLR Investment and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. STORE ELECTRONIC | SLR Investment vs. Nordic Semiconductor ASA | SLR Investment vs. AOI Electronics Co | SLR Investment vs. Elmos Semiconductor SE |
| Hanover Insurance vs. Air Lease | Hanover Insurance vs. SLR Investment Corp | Hanover Insurance vs. Virtus Investment Partners | Hanover Insurance vs. Jacquet Metal Service |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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