Correlation Between Apollo Investment and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Apollo 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 Apollo 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 Apollo Investment Corp and HANOVER INSURANCE, you can compare the effects of market volatilities on Apollo 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 Apollo Investment with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and HANOVER INSURANCE.
Diversification Opportunities for Apollo Investment and HANOVER INSURANCE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apollo and HANOVER is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Apollo 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 Apollo 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 Apollo Investment i.e., Apollo Investment and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Apollo Investment and HANOVER INSURANCE
Assuming the 90 days trading horizon Apollo Investment is expected to generate 5.31 times less return on investment than HANOVER INSURANCE. But when comparing it to its historical volatility, Apollo Investment Corp is 1.47 times less risky than HANOVER INSURANCE. It trades about 0.02 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,107 in HANOVER INSURANCE on December 4, 2024 and sell it today you would earn a total of 1,193 from holding HANOVER INSURANCE or generate 7.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Apollo Investment Corp vs. HANOVER INSURANCE
Performance |
Timeline |
Apollo Investment Corp |
HANOVER INSURANCE |
Apollo Investment and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apollo Investment and HANOVER INSURANCE
The main advantage of trading using opposite Apollo Investment and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo 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.Apollo Investment vs. Eskay Mining Corp | Apollo Investment vs. Applied Materials | Apollo Investment vs. De Grey Mining | Apollo Investment vs. Vulcan Materials |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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