Correlation Between Prudential Financial and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Travelers Companies 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 Prudential Financial and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and The Travelers Companies, you can compare the effects of market volatilities on Prudential Financial and Travelers Companies 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 Prudential Financial with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Travelers Companies.
Diversification Opportunities for Prudential Financial and Travelers Companies
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Travelers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and Prudential Financial 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 Prudential Financial are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Prudential Financial i.e., Prudential Financial and Travelers Companies go up and down completely randomly.
Pair Corralation between Prudential Financial and Travelers Companies
Considering the 90-day investment horizon Prudential Financial is expected to generate 0.41 times more return on investment than Travelers Companies. However, Prudential Financial is 2.41 times less risky than Travelers Companies. It trades about -0.33 of its potential returns per unit of risk. The Travelers Companies is currently generating about -0.15 per unit of risk. If you would invest 11,533 in Prudential Financial on January 20, 2024 and sell it today you would lose (663.00) from holding Prudential Financial or give up 5.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Prudential Financial vs. The Travelers Companies
Performance |
Timeline |
Prudential Financial |
The Travelers Companies |
Prudential Financial and Travelers Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prudential Financial and Travelers Companies
The main advantage of trading using opposite Prudential Financial and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.The idea behind Prudential Financial and The Travelers Companies 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.Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |