Correlation Between Beneficient and Hanover Insurance

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

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

Diversification Opportunities for Beneficient and Hanover Insurance

-0.85

Correlation Coefficient

Beneficient  Hanover Insurance

Pay attention - limited upside

The 3 months correlation between Beneficient and Hanover is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Beneficient Class A and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Beneficient 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 Beneficient Class A 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 Beneficient i.e., Beneficient and Hanover Insurance go up and down completely randomly.

Pair Corralation between Beneficient and Hanover Insurance

Given the investment horizon of 90 days Beneficient Class A is expected to under-perform the Hanover Insurance. In addition to that, Beneficient is 3.11 times more volatile than The Hanover Insurance. It trades about -0.25 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.13 per unit of volatility. If you would invest  15,302  in The Hanover Insurance on December 30, 2024 and sell it today you would earn a total of  1,961  from holding The Hanover Insurance or generate 12.82% return on investment over 90 days.

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

Beneficient Class A  vs.  The Hanover Insurance

Beneficient Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beneficient Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hanover Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 10 (%) 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 Beneficient and Hanover Insurance

The main advantage of trading using opposite Beneficient and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beneficient 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 Beneficient Class A 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.