Correlation Between Hanover Insurance and RELIANCE STEEL
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and RELIANCE STEEL 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 RELIANCE STEEL 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 RELIANCE STEEL AL, you can compare the effects of market volatilities on Hanover Insurance and RELIANCE STEEL 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 RELIANCE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and RELIANCE STEEL.
Diversification Opportunities for Hanover Insurance and RELIANCE STEEL
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanover and RELIANCE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and RELIANCE STEEL AL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STEEL AL 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 RELIANCE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STEEL AL has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and RELIANCE STEEL go up and down completely randomly.
Pair Corralation between Hanover Insurance and RELIANCE STEEL
Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.28 times more return on investment than RELIANCE STEEL. However, Hanover Insurance is 1.28 times more volatile than RELIANCE STEEL AL. It trades about 0.07 of its potential returns per unit of risk. RELIANCE STEEL AL is currently generating about -0.1 per unit of risk. If you would invest 15,305 in The Hanover Insurance on December 5, 2024 and sell it today you would earn a total of 995.00 from holding The Hanover Insurance or generate 6.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Hanover Insurance vs. RELIANCE STEEL AL
Performance |
Timeline |
Hanover Insurance |
RELIANCE STEEL AL |
Hanover Insurance and RELIANCE STEEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanover Insurance and RELIANCE STEEL
The main advantage of trading using opposite Hanover Insurance and RELIANCE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, RELIANCE STEEL 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 RELIANCE STEEL will offset losses from the drop in RELIANCE STEEL's long position.Hanover Insurance vs. Chunghwa Telecom Co | Hanover Insurance vs. alstria office REIT AG | Hanover Insurance vs. Singapore Telecommunications Limited | Hanover Insurance vs. COMBA TELECOM SYST |
RELIANCE STEEL vs. MidCap Financial Investment | RELIANCE STEEL vs. GALENA MINING LTD | RELIANCE STEEL vs. tokentus investment AG | RELIANCE STEEL vs. PennantPark 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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