Correlation Between Hanover Insurance and Golden Entertainment

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

Diversification Opportunities for Hanover Insurance and Golden Entertainment

-0.17

Correlation Coefficient

Hanover Insurance  Golden Entertainment

Good diversification

The 3 months correlation between Hanover and Golden is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment 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 Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Golden Entertainment go up and down completely randomly.

Pair Corralation between Hanover Insurance and Golden Entertainment

Assuming the 90 days horizon The Hanover Insurance is expected to under-perform the Golden Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 1.2 times less risky than Golden Entertainment. The stock trades about 0.0 of its potential returns per unit of risk. The Golden Entertainment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,281  in Golden Entertainment on April 23, 2025 and sell it today you would earn a total of  199.00  from holding Golden Entertainment or generate 8.72% 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.  Golden Entertainment

Hanover Insurance

Risk-Adjusted Performance

Weak

Over the last 90 days The Hanover Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hanover Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Golden Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Golden Entertainment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hanover Insurance and Golden Entertainment

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

The idea behind The Hanover Insurance and Golden Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.