Correlation Between Hanover Insurance and WICKES GROUP

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

By analyzing existing cross correlation between The Hanover Insurance and WICKES GROUP PLC, you can compare the effects of market volatilities on Hanover Insurance and WICKES GROUP 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 WICKES GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and WICKES GROUP.

Diversification Opportunities for Hanover Insurance and WICKES GROUP

-0.88

Correlation Coefficient

Hanover Insurance  WICKES GROUP

Pay attention - limited upside

The 3 months correlation between Hanover and WICKES is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and WICKES GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WICKES GROUP PLC 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 The Hanover Insurance are associated (or correlated) with WICKES GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WICKES GROUP PLC has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and WICKES GROUP go up and down completely randomly.

Pair Corralation between Hanover Insurance and WICKES GROUP

Assuming the 90 days horizon The Hanover Insurance is expected to under-perform the WICKES GROUP. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 1.12 times less risky than WICKES GROUP. The stock trades about -0.08 of its potential returns per unit of risk. The WICKES GROUP PLC is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  180.00  in WICKES GROUP PLC on October 9, 2024 and sell it today you would lose (2.00) from holding WICKES GROUP PLC or give up 1.11% of portfolio value over 90 days.

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

The Hanover Insurance  vs.  WICKES GROUP PLC

Hanover Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

WICKES GROUP PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hanover Insurance and WICKES GROUP

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

The idea behind The Hanover Insurance and WICKES GROUP PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.