Correlation Between HANOVER INSURANCE and ONEOK

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

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

Diversification Opportunities for HANOVER INSURANCE and ONEOK

-0.34

Correlation Coefficient

HANOVER INSURANCE  ONEOK

Very good diversification

The 3 months correlation between HANOVER and ONEOK is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc 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 ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and ONEOK go up and down completely randomly.

Pair Corralation between HANOVER INSURANCE and ONEOK

Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.81 times more return on investment than ONEOK. However, HANOVER INSURANCE is 1.23 times less risky than ONEOK. It trades about 0.1 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.02 per unit of risk. If you would invest  14,519  in HANOVER INSURANCE on December 28, 2024 and sell it today you would earn a total of  1,481  from holding HANOVER INSURANCE or generate 10.2% return on investment over 90 days.

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

HANOVER INSURANCE  vs.  ONEOK Inc

HANOVER INSURANCE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 7 (%) 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.

ONEOK Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ONEOK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HANOVER INSURANCE and ONEOK

The main advantage of trading using opposite HANOVER INSURANCE and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, ONEOK 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 ONEOK will offset losses from the drop in ONEOK's long position.

The idea behind HANOVER INSURANCE and ONEOK Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.