Correlation Between KILROY and Hanover Insurance

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

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

Diversification Opportunities for KILROY and Hanover Insurance

-0.12

Correlation Coefficient

KILROY  Hanover Insurance

Good diversification

The 3 months correlation between KILROY and Hanover is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding KILROY RLTY L and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and KILROY 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 KILROY RLTY L 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 KILROY i.e., KILROY and Hanover Insurance go up and down completely randomly.

Pair Corralation between KILROY and Hanover Insurance

Assuming the 90 days trading horizon KILROY is expected to generate 29.36 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, KILROY RLTY L is 3.12 times less risky than Hanover Insurance. It trades about 0.01 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14,488  in The Hanover Insurance on September 12, 2024 and sell it today you would earn a total of  1,018  from holding The Hanover Insurance or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

KILROY RLTY L  vs.  The Hanover Insurance

KILROY RLTY L

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hanover Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Hanover Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KILROY and Hanover Insurance

The main advantage of trading using opposite KILROY and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KILROY 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 KILROY RLTY L 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.