Correlation Between Hanover Insurance and CROWN

Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and CROWN 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 CROWN 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 CROWN CASTLE INTL, you can compare the effects of market volatilities on Hanover Insurance and CROWN 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 CROWN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and CROWN.

Diversification Opportunities for Hanover Insurance and CROWN

0.08

Correlation Coefficient

Hanover Insurance  CROWN

Significant diversification

The 3 months correlation between Hanover and CROWN is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and CROWN CASTLE INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTL 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTL has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and CROWN go up and down completely randomly.

Pair Corralation between Hanover Insurance and CROWN

Considering the 90-day investment horizon The Hanover Insurance is expected to generate 2.46 times more return on investment than CROWN. However, Hanover Insurance is 2.46 times more volatile than CROWN CASTLE INTL. It trades about 0.06 of its potential returns per unit of risk. CROWN CASTLE INTL is currently generating about -0.12 per unit of risk. If you would invest  14,928  in The Hanover Insurance on October 6, 2024 and sell it today you would earn a total of  392.00  from holding The Hanover Insurance or generate 2.63% return on investment over 90 days.

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

The Hanover Insurance  vs.  CROWN CASTLE INTL

Hanover Insurance

Risk-Adjusted Performance

6 of 100

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 unfluctuating technical indicators, Hanover Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanover Insurance and CROWN

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

The idea behind The Hanover Insurance and CROWN CASTLE INTL 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.