Correlation Between Hanover Insurance and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and ProSiebenSat1 Media 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 ProSiebenSat1 Media 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 ProSiebenSat1 Media SE, you can compare the effects of market volatilities on Hanover Insurance and ProSiebenSat1 Media 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 ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and ProSiebenSat1 Media.

Diversification Opportunities for Hanover Insurance and ProSiebenSat1 Media

0.65

Correlation Coefficient

Hanover Insurance  ProSiebenSat1 Media

Poor diversification

The 3 months correlation between Hanover and ProSiebenSat1 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and ProSiebenSat1 Media SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media 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 ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between Hanover Insurance and ProSiebenSat1 Media

Assuming the 90 days horizon Hanover Insurance is expected to generate 3.45 times less return on investment than ProSiebenSat1 Media. But when comparing it to its historical volatility, The Hanover Insurance is 1.16 times less risky than ProSiebenSat1 Media. It trades about 0.07 of its potential returns per unit of risk. ProSiebenSat1 Media SE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  501.00  in ProSiebenSat1 Media SE on December 23, 2024 and sell it today you would earn a total of  158.00  from holding ProSiebenSat1 Media SE or generate 31.54% 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.  ProSiebenSat1 Media SE

Hanover Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hanover Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ProSiebenSat1 Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ProSiebenSat1 Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanover Insurance and ProSiebenSat1 Media

The main advantage of trading using opposite Hanover Insurance and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind The Hanover Insurance and ProSiebenSat1 Media SE 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.