Correlation Between Anglo American and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Anglo American 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 Anglo American and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American Platinum and The Travelers Companies, you can compare the effects of market volatilities on Anglo American 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 Anglo American with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Travelers Companies.
Diversification Opportunities for Anglo American and Travelers Companies
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Anglo and Travelers is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum 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 Anglo American 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 Anglo American Platinum 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 Anglo American i.e., Anglo American and Travelers Companies go up and down completely randomly.
Pair Corralation between Anglo American and Travelers Companies
Assuming the 90 days horizon Anglo American Platinum is expected to generate 6.15 times more return on investment than Travelers Companies. However, Anglo American is 6.15 times more volatile than The Travelers Companies. It trades about 0.07 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.24 per unit of risk. If you would invest 655.00 in Anglo American Platinum on December 29, 2023 and sell it today you would earn a total of 30.00 from holding Anglo American Platinum or generate 4.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Anglo American Platinum vs. The Travelers Companies
Performance |
Timeline |
Anglo American Platinum |
The Travelers Companies |
Anglo American and Travelers Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Anglo American and Travelers Companies
The main advantage of trading using opposite Anglo American and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American 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.Anglo American vs. Compania De Minas | Anglo American vs. Kroger Company | Anglo American vs. SCOR PK | Anglo American vs. Franklin Strategic Mortgage |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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