Correlation Between Hanover Insurance and Advanced Micro

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

Diversification Opportunities for Hanover Insurance and Advanced Micro

-0.08

Correlation Coefficient

Hanover Insurance  Advanced Micro

Good diversification

The 3 months correlation between Hanover and Advanced is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Advanced Micro go up and down completely randomly.

Pair Corralation between Hanover Insurance and Advanced Micro

Assuming the 90 days horizon The Hanover Insurance is expected to under-perform the Advanced Micro. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 1.87 times less risky than Advanced Micro. The stock trades about -0.27 of its potential returns per unit of risk. The Advanced Micro Devices is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  10,064  in Advanced Micro Devices on April 14, 2025 and sell it today you would earn a total of  2,498  from holding Advanced Micro Devices or generate 24.82% return on investment over 90 days.

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

The Hanover Insurance  vs.  Advanced Micro Devices

Hanover Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hanover Insurance is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Advanced Micro Devices

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Micro reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanover Insurance and Advanced Micro

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

The idea behind The Hanover Insurance and Advanced Micro Devices 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.