Correlation Between RE Old and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both RE Old 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 RE Old and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RE Old and The Travelers Companies, you can compare the effects of market volatilities on RE Old 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 RE Old with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of RE Old and Travelers Companies.
Diversification Opportunities for RE Old and Travelers Companies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RE Old and Travelers is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding RE Old 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 RE Old 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 RE Old 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 RE Old i.e., RE Old and Travelers Companies go up and down completely randomly.
Pair Corralation between RE Old and Travelers Companies
Allowing for the 90-day total investment horizon RE Old is expected to generate 3.72 times less return on investment than Travelers Companies. In addition to that, RE Old is 1.18 times more volatile than The Travelers Companies. It trades about 0.03 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.11 per unit of volatility. If you would invest 16,855 in The Travelers Companies on December 29, 2023 and sell it today you would earn a total of 6,028 from holding The Travelers Companies or generate 35.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 44.76% |
Values | Daily Returns |
RE Old vs. The Travelers Companies
Performance |
Timeline |
RE Old |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
The Travelers Companies |
RE Old and Travelers Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RE Old and Travelers Companies
The main advantage of trading using opposite RE Old and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RE Old 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.RE Old vs. Dow Inc | RE Old vs. Suntory Beverage Food | RE Old vs. Avient Corp | RE Old vs. Hill Street Beverage |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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