Correlation Between Travelers Companies and Polaris Industries
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Polaris Industries 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 Travelers Companies and Polaris Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Polaris Industries, you can compare the effects of market volatilities on Travelers Companies and Polaris Industries 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 Travelers Companies with a short position of Polaris Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Polaris Industries.
Diversification Opportunities for Travelers Companies and Polaris Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Polaris is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Polaris Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Industries and Travelers Companies 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 Travelers Companies are associated (or correlated) with Polaris Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Industries has no effect on the direction of Travelers Companies i.e., Travelers Companies and Polaris Industries go up and down completely randomly.
Pair Corralation between Travelers Companies and Polaris Industries
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.64 times more return on investment than Polaris Industries. However, The Travelers Companies is 1.55 times less risky than Polaris Industries. It trades about 0.11 of its potential returns per unit of risk. Polaris Industries is currently generating about -0.11 per unit of risk. If you would invest 17,046 in The Travelers Companies on January 24, 2024 and sell it today you would earn a total of 4,381 from holding The Travelers Companies or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Polaris Industries
Performance |
| Timeline |
| The Travelers Companies |
| Polaris Industries |
Travelers Companies and Polaris Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Polaris Industries
The main advantage of trading using opposite Travelers Companies and Polaris Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Polaris Industries 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 Polaris Industries will offset losses from the drop in Polaris Industries' long position.| Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation | Travelers Companies vs. Via Renewables |
| Polaris Industries vs. Cedar Fair LP | Polaris Industries vs. Six Flags Entertainment | Polaris Industries vs. Leatt Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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