Correlation Between PARKEN Sport and Hanover Insurance

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

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

Diversification Opportunities for PARKEN Sport and Hanover Insurance

0.24

Correlation Coefficient

PARKEN Sport  Hanover Insurance

Modest diversification

The 3 months correlation between PARKEN and Hanover is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and Hanover Insurance go up and down completely randomly.

Pair Corralation between PARKEN Sport and Hanover Insurance

Assuming the 90 days horizon PARKEN Sport is expected to generate 1.11 times less return on investment than Hanover Insurance. In addition to that, PARKEN Sport is 1.02 times more volatile than The Hanover Insurance. It trades about 0.07 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.08 per unit of volatility. If you would invest  14,523  in The Hanover Insurance on December 29, 2024 and sell it today you would earn a total of  1,477  from holding The Hanover Insurance or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PARKEN Sport Entertainment  vs.  The Hanover Insurance

PARKEN Sport Enterta

Risk-Adjusted Performance

Modest

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

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 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hanover Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PARKEN Sport and Hanover Insurance

The main advantage of trading using opposite PARKEN Sport and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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 PARKEN Sport Entertainment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..