Correlation Between HANOVER INSURANCE and Sumitomo
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Sumitomo 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 Sumitomo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Sumitomo, you can compare the effects of market volatilities on HANOVER INSURANCE and Sumitomo 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 Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Sumitomo.
Diversification Opportunities for HANOVER INSURANCE and Sumitomo
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HANOVER and Sumitomo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo 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 Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Sumitomo go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Sumitomo
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.7 times more return on investment than Sumitomo. However, HANOVER INSURANCE is 1.44 times less risky than Sumitomo. It trades about 0.11 of its potential returns per unit of risk. Sumitomo is currently generating about 0.07 per unit of risk. 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 Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
HANOVER INSURANCE vs. Sumitomo
Performance |
Timeline |
HANOVER INSURANCE |
Sumitomo |
HANOVER INSURANCE and Sumitomo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HANOVER INSURANCE and Sumitomo
The main advantage of trading using opposite HANOVER INSURANCE and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Sumitomo 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 Sumitomo will offset losses from the drop in Sumitomo's long position.HANOVER INSURANCE vs. alstria office REIT AG | HANOVER INSURANCE vs. H2O Retailing | HANOVER INSURANCE vs. SIDETRADE EO 1 | HANOVER INSURANCE vs. Canon Marketing Japan |
Sumitomo vs. Daido Steel Co | Sumitomo vs. ANGANG STEEL H | Sumitomo vs. Tencent Music Entertainment | Sumitomo vs. COSMOSTEEL HLDGS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |