Correlation Between Hanover Insurance and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Travelers Companies 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 Travelers Companies 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 The Travelers Companies, you can compare the effects of market volatilities on Hanover Insurance and Travelers Companies 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 Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Travelers Companies.
Diversification Opportunities for Hanover Insurance and Travelers Companies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and Travelers is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies 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 Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Travelers Companies go up and down completely randomly.
Pair Corralation between Hanover Insurance and Travelers Companies
Considering the 90-day investment horizon Hanover Insurance is expected to generate 2.64 times less return on investment than Travelers Companies. But when comparing it to its historical volatility, The Hanover Insurance is 1.08 times less risky than Travelers Companies. It trades about 0.08 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 15,760 in The Travelers Companies on January 20, 2024 and sell it today you would earn a total of 5,282 from holding The Travelers Companies or generate 33.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.19% |
Values | Daily Returns |
The Hanover Insurance vs. The Travelers Companies
Performance |
Timeline |
Hanover Insurance |
The Travelers Companies |
Hanover Insurance and Travelers Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanover Insurance and Travelers Companies
The main advantage of trading using opposite Hanover Insurance and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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