Correlation Between Hanover Insurance and TWFG,

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

Diversification Opportunities for Hanover Insurance and TWFG,

0.78

Correlation Coefficient

Hanover Insurance  TWFG,

Poor diversification

The 3 months correlation between Hanover and TWFG, is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and TWFG, Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWFG, Class A 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 TWFG,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWFG, Class A has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and TWFG, go up and down completely randomly.

Pair Corralation between Hanover Insurance and TWFG,

Considering the 90-day investment horizon The Hanover Insurance is expected to generate 0.45 times more return on investment than TWFG,. However, The Hanover Insurance is 2.23 times less risky than TWFG,. It trades about -0.18 of its potential returns per unit of risk. TWFG, Class A is currently generating about -0.26 per unit of risk. If you would invest  16,079  in The Hanover Insurance on September 24, 2024 and sell it today you would lose (715.50) from holding The Hanover Insurance or give up 4.45% of portfolio value over 90 days.

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

The Hanover Insurance  vs.  TWFG, Class A

Hanover Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

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

TWFG, Class A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TWFG, Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, TWFG, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanover Insurance and TWFG,

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

The idea behind The Hanover Insurance and TWFG, Class A 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.