Correlation Between HANOVER INSURANCE and Accor SA
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Accor SA 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 Accor SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Accor SA, you can compare the effects of market volatilities on HANOVER INSURANCE and Accor SA 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 Accor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Accor SA.
Diversification Opportunities for HANOVER INSURANCE and Accor SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HANOVER and Accor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Accor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor SA 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 HANOVER INSURANCE are associated (or correlated) with Accor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor SA has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Accor SA go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Accor SA
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 1.26 times less return on investment than Accor SA. But when comparing it to its historical volatility, HANOVER INSURANCE is 1.03 times less risky than Accor SA. It trades about 0.14 of its potential returns per unit of risk. Accor SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,933 in Accor SA on September 23, 2024 and sell it today you would earn a total of 663.00 from holding Accor SA or generate 16.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
HANOVER INSURANCE vs. Accor SA
Performance |
Timeline |
HANOVER INSURANCE |
Accor SA |
HANOVER INSURANCE and Accor SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HANOVER INSURANCE and Accor SA
The main advantage of trading using opposite HANOVER INSURANCE and Accor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Accor SA 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 Accor SA will offset losses from the drop in Accor SA's long position.HANOVER INSURANCE vs. GRIFFIN MINING LTD | HANOVER INSURANCE vs. Aegean Airlines SA | HANOVER INSURANCE vs. MCEWEN MINING INC | HANOVER INSURANCE vs. SOUTHWEST AIRLINES |
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Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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