Correlation Between HANOVER INSURANCE and CANON MARKETING

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

By analyzing existing cross correlation between HANOVER INSURANCE and CANON MARKETING JP, you can compare the effects of market volatilities on HANOVER INSURANCE and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and CANON MARKETING.

Diversification Opportunities for HANOVER INSURANCE and CANON MARKETING

0.27

Correlation Coefficient

HANOVER INSURANCE  CANON MARKETING

Modest diversification

The 3 months correlation between HANOVER and CANON is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and CANON MARKETING go up and down completely randomly.

Pair Corralation between HANOVER INSURANCE and CANON MARKETING

Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 1.02 times more return on investment than CANON MARKETING. However, HANOVER INSURANCE is 1.02 times more volatile than CANON MARKETING JP. It trades about 0.18 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.1 per unit of risk. If you would invest  13,014  in HANOVER INSURANCE on September 3, 2024 and sell it today you would earn a total of  2,186  from holding HANOVER INSURANCE or generate 16.8% return on investment over 90 days.

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

HANOVER INSURANCE  vs.  CANON MARKETING JP

HANOVER INSURANCE

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, HANOVER INSURANCE exhibited solid returns over the last few months and may actually be approaching a breakup point.

CANON MARKETING JP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HANOVER INSURANCE and CANON MARKETING

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

The idea behind HANOVER INSURANCE and CANON MARKETING JP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.