Correlation Between Hanover Insurance and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Addtech AB 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 Addtech AB 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 Addtech AB, you can compare the effects of market volatilities on Hanover Insurance and Addtech AB 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 Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Addtech AB.
Diversification Opportunities for Hanover Insurance and Addtech AB
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanover and Addtech is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Addtech AB go up and down completely randomly.
Pair Corralation between Hanover Insurance and Addtech AB
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.19 times less return on investment than Addtech AB. But when comparing it to its historical volatility, The Hanover Insurance is 1.14 times less risky than Addtech AB. It trades about 0.1 of its potential returns per unit of risk. Addtech AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,452 in Addtech AB on October 24, 2024 and sell it today you would earn a total of 252.00 from holding Addtech AB or generate 10.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Hanover Insurance vs. Addtech AB
Performance |
Timeline |
Hanover Insurance |
Addtech AB |
Hanover Insurance and Addtech AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanover Insurance and Addtech AB
The main advantage of trading using opposite Hanover Insurance and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.Hanover Insurance vs. HELIOS TECHS INC | Hanover Insurance vs. T MOBILE US | Hanover Insurance vs. Ribbon Communications | Hanover Insurance vs. ecotel communication ag |
Addtech AB vs. RATIONAL Aktiengesellschaft | Addtech AB vs. WW Grainger | Addtech AB vs. Fastenal Company | Addtech AB vs. Watsco Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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