Correlation Between LIFENET INSURANCE and HANOVER INSURANCE

Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE 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 LIFENET INSURANCE and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LIFENET INSURANCE CO and HANOVER INSURANCE, you can compare the effects of market volatilities on LIFENET INSURANCE 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 LIFENET INSURANCE with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and HANOVER INSURANCE.

Diversification Opportunities for LIFENET INSURANCE and HANOVER INSURANCE

-0.35

Correlation Coefficient

LIFENET INSURANCE  HANOVER INSURANCE

Very good diversification

The 3 months correlation between LIFENET and HANOVER is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and LIFENET 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 LIFENET INSURANCE CO 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 LIFENET INSURANCE i.e., LIFENET INSURANCE and HANOVER INSURANCE go up and down completely randomly.

Pair Corralation between LIFENET INSURANCE and HANOVER INSURANCE

Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the HANOVER INSURANCE. In addition to that, LIFENET INSURANCE is 1.04 times more volatile than HANOVER INSURANCE. It trades about -0.03 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.11 per unit of volatility. If you would invest  14,519  in HANOVER INSURANCE on December 30, 2024 and sell it today you would earn a total of  1,581  from holding HANOVER INSURANCE or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LIFENET INSURANCE CO  vs.  HANOVER INSURANCE

LIFENET INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIFENET INSURANCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

HANOVER INSURANCE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HANOVER INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LIFENET INSURANCE and HANOVER INSURANCE

The main advantage of trading using opposite LIFENET INSURANCE and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE 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.

The idea behind LIFENET INSURANCE CO and HANOVER INSURANCE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.