Correlation Between Hanover Insurance and Alleghany
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Alleghany 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 Hanover Insurance and Alleghany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hanover Insurance and Alleghany, you can compare the effects of market volatilities on Hanover Insurance and Alleghany 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 Hanover Insurance with a short position of Alleghany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Alleghany.
Diversification Opportunities for Hanover Insurance and Alleghany
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanover and Alleghany is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Alleghany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleghany and Hanover Insurance 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 The Hanover Insurance are associated (or correlated) with Alleghany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleghany has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Alleghany go up and down completely randomly.
Pair Corralation between Hanover Insurance and Alleghany
Considering the 90-day investment horizon The Hanover Insurance is expected to under-perform the Alleghany. In addition to that, Hanover Insurance is 9.36 times more volatile than Alleghany. It trades about -0.01 of its total potential returns per unit of risk. Alleghany is currently generating about 0.11 per unit of volatility. If you would invest 83,378 in Alleghany on January 20, 2024 and sell it today you would earn a total of 1,401 from holding Alleghany or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 20.84% |
| Values | Daily Returns |
The Hanover Insurance vs. Alleghany
Performance |
| Timeline |
| Hanover Insurance |
| Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hanover Insurance and Alleghany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and Alleghany
The main advantage of trading using opposite Hanover Insurance and Alleghany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Alleghany 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 Alleghany will offset losses from the drop in Alleghany's long position.| Hanover Insurance vs. Progressive Corp | Hanover Insurance vs. Cincinnati Financial | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Markel |
| Alleghany vs. Arhaus Inc | Alleghany vs. Simon Property Group | Alleghany vs. Paysafe | Alleghany vs. Valneva SE ADR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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