Correlation Between HANOVER INSURANCE and TRAVEL +

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

By analyzing existing cross correlation between HANOVER INSURANCE and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on HANOVER INSURANCE and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and TRAVEL +.

Diversification Opportunities for HANOVER INSURANCE and TRAVEL +

-0.18

Correlation Coefficient

HANOVER INSURANCE  TRAVEL +

Good diversification

The 3 months correlation between HANOVER and TRAVEL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and TRAVEL + go up and down completely randomly.

Pair Corralation between HANOVER INSURANCE and TRAVEL +

Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 23.8 times less return on investment than TRAVEL +. But when comparing it to its historical volatility, HANOVER INSURANCE is 1.18 times less risky than TRAVEL +. It trades about 0.01 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,737  in TRAVEL LEISURE DL 01 on April 24, 2025 and sell it today you would earn a total of  1,163  from holding TRAVEL LEISURE DL 01 or generate 31.12% return on investment over 90 days.

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

HANOVER INSURANCE  vs.  TRAVEL LEISURE DL 01

HANOVER INSURANCE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, HANOVER INSURANCE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HANOVER INSURANCE and TRAVEL +

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

The idea behind HANOVER INSURANCE and TRAVEL LEISURE DL 01 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.