Correlation Between NorAm Drilling and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling 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 NorAm Drilling and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and The Hanover Insurance, you can compare the effects of market volatilities on NorAm Drilling 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 NorAm Drilling with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Hanover Insurance.
Diversification Opportunities for NorAm Drilling and Hanover Insurance
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NorAm and Hanover is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and NorAm Drilling 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and Hanover Insurance go up and down completely randomly.
Pair Corralation between NorAm Drilling and Hanover Insurance
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.68 times more return on investment than Hanover Insurance. However, NorAm Drilling is 2.68 times more volatile than The Hanover Insurance. It trades about 0.07 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.02 per unit of risk. If you would invest 239.00 in NorAm Drilling AS on September 11, 2025 and sell it today you would earn a total of 39.00 from holding NorAm Drilling AS or generate 16.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. The Hanover Insurance
Performance |
| Timeline |
| NorAm Drilling AS |
| Hanover Insurance |
NorAm Drilling and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Hanover Insurance
The main advantage of trading using opposite NorAm Drilling and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling 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.| NorAm Drilling vs. China Foods Limited | NorAm Drilling vs. Laureate Education | NorAm Drilling vs. CHINA EDUCATION GROUP | NorAm Drilling vs. NISSIN FOODS HLDGS |
| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Kemper |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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