Correlation Between George Weston and Hannover

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

By analyzing existing cross correlation between George Weston Limited and Hannover Re, you can compare the effects of market volatilities on George Weston and Hannover 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 George Weston with a short position of Hannover. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Hannover.

Diversification Opportunities for George Weston and Hannover

0.04

Correlation Coefficient

George Weston  Hannover

Significant diversification

The 3 months correlation between George and Hannover is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Hannover Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Re and George Weston 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 George Weston Limited are associated (or correlated) with Hannover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Re has no effect on the direction of George Weston i.e., George Weston and Hannover go up and down completely randomly.

Pair Corralation between George Weston and Hannover

Assuming the 90 days horizon George Weston Limited is expected to under-perform the Hannover. But the pink sheet apears to be less risky and, when comparing its historical volatility, George Weston Limited is 1.48 times less risky than Hannover. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Hannover Re is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,415  in Hannover Re on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Hannover Re or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

George Weston Limited  vs.  Hannover Re

George Weston Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days George Weston Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, George Weston is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hannover Re

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hannover Re has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hannover is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with George Weston and Hannover

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

The idea behind George Weston Limited and Hannover Re 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.