Correlation Between Hiscox and Horace Mann

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

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

Diversification Opportunities for Hiscox and Horace Mann

0.59

Correlation Coefficient

Hiscox  Horace Mann

Very weak diversification

The 3 months correlation between Hiscox and Horace is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hiscox and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators and Hiscox 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 Hiscox are associated (or correlated) with Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of Hiscox i.e., Hiscox and Horace Mann go up and down completely randomly.

Pair Corralation between Hiscox and Horace Mann

Assuming the 90 days horizon Hiscox is expected to generate 1.79 times more return on investment than Horace Mann. However, Hiscox is 1.79 times more volatile than Horace Mann Educators. It trades about 0.05 of its potential returns per unit of risk. Horace Mann Educators is currently generating about 0.07 per unit of risk. If you would invest  2,825  in Hiscox on December 19, 2024 and sell it today you would earn a total of  185.00  from holding Hiscox or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Hiscox  vs.  Horace Mann Educators

Hiscox

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hiscox are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Hiscox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Horace Mann Educators

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Horace Mann may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hiscox and Horace Mann

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

The idea behind Hiscox and Horace Mann Educators 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.