Correlation Between Hanover Insurance and Bim Birlesik

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

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

Diversification Opportunities for Hanover Insurance and Bim Birlesik

0.64

Correlation Coefficient

Hanover Insurance  Bim Birlesik

Poor diversification

The 3 months correlation between Hanover and Bim is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Bim Birlesik Magazalar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bim Birlesik Magazalar and Hanover Insurance 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 The Hanover Insurance are associated (or correlated) with Bim Birlesik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bim Birlesik Magazalar has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Bim Birlesik go up and down completely randomly.

Pair Corralation between Hanover Insurance and Bim Birlesik

Considering the 90-day investment horizon Hanover Insurance is expected to generate 1.99 times less return on investment than Bim Birlesik. But when comparing it to its historical volatility, The Hanover Insurance is 4.45 times less risky than Bim Birlesik. It trades about 0.15 of its potential returns per unit of risk. Bim Birlesik Magazalar is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  980.00  in Bim Birlesik Magazalar on December 28, 2024 and sell it today you would earn a total of  170.00  from holding Bim Birlesik Magazalar or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

The Hanover Insurance  vs.  Bim Birlesik Magazalar

Hanover Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 11 (%) 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.

Bim Birlesik Magazalar

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bim Birlesik Magazalar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bim Birlesik reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanover Insurance and Bim Birlesik

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

The idea behind The Hanover Insurance and Bim Birlesik Magazalar 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.