Correlation Between GameStop Corp and HANOVER INSURANCE

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Can any of the company-specific risk be diversified away by investing in both GameStop Corp 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 GameStop Corp and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and HANOVER INSURANCE, you can compare the effects of market volatilities on GameStop Corp 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 GameStop Corp with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and HANOVER INSURANCE.

Diversification Opportunities for GameStop Corp and HANOVER INSURANCE

GameStopHANOVERDiversified AwayGameStopHANOVERDiversified Away100%
0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between GameStop and HANOVER is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and GameStop Corp 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 GameStop 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 GameStop Corp i.e., GameStop Corp and HANOVER INSURANCE go up and down completely randomly.

Pair Corralation between GameStop Corp and HANOVER INSURANCE

Assuming the 90 days trading horizon GameStop Corp is expected to generate 2.53 times more return on investment than HANOVER INSURANCE. However, GameStop Corp is 2.53 times more volatile than HANOVER INSURANCE. It trades about 0.13 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.09 per unit of risk. If you would invest  2,118  in GameStop Corp on October 26, 2024 and sell it today you would earn a total of  580.00  from holding GameStop Corp or generate 27.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.33%
ValuesDaily Returns

GameStop Corp  vs.  HANOVER INSURANCE

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030405060
JavaScript chart by amCharts 3.21.15GS2C AF4
       Timeline  
GameStop Corp 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GameStop Corp reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2022242628303234
HANOVER INSURANCE 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 7 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan135140145150155

GameStop Corp and HANOVER INSURANCE Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.79-8.83-5.87-2.910.04933.066.229.3812.5415.7 0.050.100.15
JavaScript chart by amCharts 3.21.15GS2C AF4
       Returns  

Pair Trading with GameStop Corp and HANOVER INSURANCE

The main advantage of trading using opposite GameStop Corp and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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 GameStop 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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