Correlation Between Forsys Metals and HANOVER INSURANCE

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

By analyzing existing cross correlation between Forsys Metals Corp and HANOVER INSURANCE, you can compare the effects of market volatilities on Forsys Metals 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 Forsys Metals with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and HANOVER INSURANCE.

Diversification Opportunities for Forsys Metals and HANOVER INSURANCE

-0.31

Correlation Coefficient

Forsys Metals  HANOVER INSURANCE

Very good diversification

The 3 months correlation between Forsys and HANOVER is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and Forsys Metals 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 Forsys Metals Corp 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 Forsys Metals i.e., Forsys Metals and HANOVER INSURANCE go up and down completely randomly.

Pair Corralation between Forsys Metals and HANOVER INSURANCE

Assuming the 90 days horizon Forsys Metals is expected to generate 2.74 times less return on investment than HANOVER INSURANCE. In addition to that, Forsys Metals is 3.13 times more volatile than HANOVER INSURANCE. It trades about 0.01 of its total potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.12 per unit of volatility. If you would invest  13,318  in HANOVER INSURANCE on October 7, 2024 and sell it today you would earn a total of  1,382  from holding HANOVER INSURANCE or generate 10.38% return on investment over 90 days.

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

Forsys Metals Corp  vs.  HANOVER INSURANCE

Forsys Metals Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Forsys Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HANOVER INSURANCE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HANOVER INSURANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Forsys Metals and HANOVER INSURANCE

The main advantage of trading using opposite Forsys Metals and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forsys Metals 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 Forsys Metals Corp and 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.