Correlation Between OAKTRSPECLENDNEW and Hanover Insurance

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

By analyzing existing cross correlation between OAKTRSPECLENDNEW and The Hanover Insurance, you can compare the effects of market volatilities on OAKTRSPECLENDNEW and Hanover Insurance 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 OAKTRSPECLENDNEW with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of OAKTRSPECLENDNEW and Hanover Insurance.

Diversification Opportunities for OAKTRSPECLENDNEW and Hanover Insurance

0.57

Correlation Coefficient

OAKTRSPECLENDNEW  Hanover Insurance

Very weak diversification

The 3 months correlation between OAKTRSPECLENDNEW and Hanover is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding OAKTRSPECLENDNEW and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW are associated (or correlated) with Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of OAKTRSPECLENDNEW i.e., OAKTRSPECLENDNEW and Hanover Insurance go up and down completely randomly.

Pair Corralation between OAKTRSPECLENDNEW and Hanover Insurance

Assuming the 90 days trading horizon OAKTRSPECLENDNEW is expected to generate 3.44 times less return on investment than Hanover Insurance. In addition to that, OAKTRSPECLENDNEW is 1.02 times more volatile than The Hanover Insurance. It trades about 0.12 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.43 per unit of volatility. If you would invest  13,500  in The Hanover Insurance on September 2, 2024 and sell it today you would earn a total of  2,300  from holding The Hanover Insurance or generate 17.04% return on investment over 90 days.

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

OAKTRSPECLENDNEW  vs.  The Hanover Insurance

OAKTRSPECLENDNEW

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OAKTRSPECLENDNEW are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, OAKTRSPECLENDNEW is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hanover Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OAKTRSPECLENDNEW and Hanover Insurance

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

The idea behind OAKTRSPECLENDNEW and The Hanover Insurance 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.