Correlation Between Hanover Insurance and Meteoric Resources

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

Diversification Opportunities for Hanover Insurance and Meteoric Resources

-0.33

Correlation Coefficient

Hanover Insurance  Meteoric Resources

Very good diversification

The 3 months correlation between Hanover and Meteoric is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Meteoric Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meteoric Resources 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 Meteoric Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meteoric Resources has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Meteoric Resources go up and down completely randomly.

Pair Corralation between Hanover Insurance and Meteoric Resources

Assuming the 90 days horizon The Hanover Insurance is expected to under-perform the Meteoric Resources. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 8.05 times less risky than Meteoric Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Meteoric Resources NL is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5.90  in Meteoric Resources NL on April 25, 2025 and sell it today you would earn a total of  1.65  from holding Meteoric Resources NL or generate 27.97% 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.  Meteoric Resources NL

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Meteoric Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meteoric Resources NL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meteoric Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanover Insurance and Meteoric Resources

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

The idea behind The Hanover Insurance and Meteoric Resources NL 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.