Correlation Between Hanover Insurance and Tokio Marine
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Tokio Marine 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 Tokio Marine 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 Tokio Marine Holdings, you can compare the effects of market volatilities on Hanover Insurance and Tokio Marine 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 Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Tokio Marine.
Diversification Opportunities for Hanover Insurance and Tokio Marine
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanover and Tokio is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Tokio Marine go up and down completely randomly.
Pair Corralation between Hanover Insurance and Tokio Marine
Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.78 times more return on investment than Tokio Marine. However, The Hanover Insurance is 1.29 times less risky than Tokio Marine. It trades about 0.12 of its potential returns per unit of risk. Tokio Marine Holdings is currently generating about 0.05 per unit of risk. If you would invest 13,317 in The Hanover Insurance on September 30, 2024 and sell it today you would earn a total of 1,483 from holding The Hanover Insurance or generate 11.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Hanover Insurance vs. Tokio Marine Holdings
Performance |
Timeline |
Hanover Insurance |
Tokio Marine Holdings |
Hanover Insurance and Tokio Marine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanover Insurance and Tokio Marine
The main advantage of trading using opposite Hanover Insurance and Tokio Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, Tokio Marine 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 Tokio Marine will offset losses from the drop in Tokio Marine's long position.Hanover Insurance vs. THORNEY TECHS LTD | Hanover Insurance vs. X FAB Silicon Foundries | Hanover Insurance vs. DXC Technology Co | Hanover Insurance vs. Wayside Technology Group |
Tokio Marine vs. W R Berkley | Tokio Marine vs. Loews Corp | Tokio Marine vs. The Hanover Insurance | Tokio Marine vs. ZhongAn Online P |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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