Correlation Between Hanover Insurance and Valneva SE

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

Diversification Opportunities for Hanover Insurance and Valneva SE

-0.72

Correlation Coefficient

Hanover Insurance  Valneva SE

Pay attention - limited upside

The 3 months correlation between Hanover and Valneva is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Valneva SE go up and down completely randomly.

Pair Corralation between Hanover Insurance and Valneva SE

Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.38 times more return on investment than Valneva SE. However, The Hanover Insurance is 2.62 times less risky than Valneva SE. It trades about 0.15 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.11 per unit of risk. If you would invest  12,352  in The Hanover Insurance on September 27, 2024 and sell it today you would earn a total of  3,188  from holding The Hanover Insurance or generate 25.81% return on investment over 90 days.

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

The Hanover Insurance  vs.  Valneva SE ADR

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 January 2025.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hanover Insurance and Valneva SE

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

The idea behind The Hanover Insurance and Valneva SE ADR 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 Transaction History module to view history of all your transactions and understand their impact on performance.