Correlation Between Allient and Hanover Insurance

Can any of the company-specific risk be diversified away by investing in both Allient and Hanover Insurance 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 Allient and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allient and The Hanover Insurance, you can compare the effects of market volatilities on Allient and Hanover Insurance 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 Allient with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and Hanover Insurance.

Diversification Opportunities for Allient and Hanover Insurance

-0.35

Correlation Coefficient

Allient  Hanover Insurance

Very good diversification

The 3 months correlation between Allient and Hanover is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Allient and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Allient 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 Allient are associated (or correlated) with Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Allient i.e., Allient and Hanover Insurance go up and down completely randomly.

Pair Corralation between Allient and Hanover Insurance

Given the investment horizon of 90 days Allient is expected to under-perform the Hanover Insurance. In addition to that, Allient is 1.84 times more volatile than The Hanover Insurance. It trades about 0.0 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.15 per unit of volatility. If you would invest  15,302  in The Hanover Insurance on December 28, 2024 and sell it today you would earn a total of  2,159  from holding The Hanover Insurance or generate 14.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allient  vs.  The Hanover Insurance

Allient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allient is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hanover Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Hanover Insurance

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

The idea behind Allient and The Hanover Insurance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.