Correlation Between HANOVER INSURANCE and Metro AG
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Metro AG, you can compare the effects of market volatilities on HANOVER INSURANCE and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Metro AG.
Diversification Opportunities for HANOVER INSURANCE and Metro AG
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and Metro is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 HANOVER INSURANCE are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Metro AG go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Metro AG
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 1.47 times less return on investment than Metro AG. But when comparing it to its historical volatility, HANOVER INSURANCE is 2.46 times less risky than Metro AG. It trades about 0.1 of its potential returns per unit of risk. Metro AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 482.00 in Metro AG on December 28, 2024 and sell it today you would earn a total of 53.00 from holding Metro AG or generate 11.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
HANOVER INSURANCE vs. Metro AG
Performance |
Timeline |
HANOVER INSURANCE |
Metro AG |
HANOVER INSURANCE and Metro AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HANOVER INSURANCE and Metro AG
The main advantage of trading using opposite HANOVER INSURANCE and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.HANOVER INSURANCE vs. PROSIEBENSAT1 MEDIADR4 | HANOVER INSURANCE vs. Ultra Clean Holdings | HANOVER INSURANCE vs. PARKEN Sport Entertainment | HANOVER INSURANCE vs. Media and Games |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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