Correlation Between Hanover Insurance and UNIVMUSIC GRPADR/050

Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on Hanover Insurance and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and UNIVMUSIC GRPADR/050.

Diversification Opportunities for Hanover Insurance and UNIVMUSIC GRPADR/050

0.28

Correlation Coefficient

Hanover Insurance  UNIVMUSIC GRPADR/050

Modest diversification

The 3 months correlation between Hanover and UNIVMUSIC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and UNIVMUSIC GRPADR/050 go up and down completely randomly.

Pair Corralation between Hanover Insurance and UNIVMUSIC GRPADR/050

Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.47 times more return on investment than UNIVMUSIC GRPADR/050. However, Hanover Insurance is 1.47 times more volatile than UNIVMUSIC GRPADR050. It trades about 0.14 of its potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.01 per unit of risk. If you would invest  14,800  in The Hanover Insurance on December 2, 2024 and sell it today you would earn a total of  1,000.00  from holding The Hanover Insurance or generate 6.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Hanover Insurance  vs.  UNIVMUSIC GRPADR050

Hanover Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hanover Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UNIVMUSIC GRPADR/050

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, UNIVMUSIC GRPADR/050 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanover Insurance and UNIVMUSIC GRPADR/050

The main advantage of trading using opposite Hanover Insurance and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050's long position.

The idea behind The Hanover Insurance and UNIVMUSIC GRPADR050 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..