Correlation Between ProAssurance and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both ProAssurance 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 ProAssurance and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProAssurance and The Travelers Companies, you can compare the effects of market volatilities on ProAssurance 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 ProAssurance with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProAssurance and Travelers Companies.
Diversification Opportunities for ProAssurance and Travelers Companies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProAssurance and Travelers is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProAssurance 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 ProAssurance 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 ProAssurance 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 ProAssurance i.e., ProAssurance and Travelers Companies go up and down completely randomly.
Pair Corralation between ProAssurance and Travelers Companies
Considering the 90-day investment horizon ProAssurance is expected to generate 2.04 times more return on investment than Travelers Companies. However, ProAssurance is 2.04 times more volatile than The Travelers Companies. It trades about 0.17 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.13 per unit of risk. If you would invest 1,537 in ProAssurance on August 27, 2024 and sell it today you would earn a total of 138.00 from holding ProAssurance or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProAssurance vs. The Travelers Companies
Performance |
| Timeline |
| ProAssurance |
| The Travelers Companies |
ProAssurance and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProAssurance and Travelers Companies
The main advantage of trading using opposite ProAssurance and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProAssurance 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.| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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