Correlation Between Travelers Companies and Armada Mercantile
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Armada Mercantile 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 Armada Mercantile 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 Armada Mercantile, you can compare the effects of market volatilities on Travelers Companies and Armada Mercantile 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 Armada Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Armada Mercantile.
Diversification Opportunities for Travelers Companies and Armada Mercantile
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Armada is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile 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 Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Travelers Companies i.e., Travelers Companies and Armada Mercantile go up and down completely randomly.
Pair Corralation between Travelers Companies and Armada Mercantile
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.2 times more return on investment than Armada Mercantile. However, The Travelers Companies is 4.91 times less risky than Armada Mercantile. It trades about 0.2 of its potential returns per unit of risk. Armada Mercantile is currently generating about 0.03 per unit of risk. If you would invest 25,237 in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of 1,456 from holding The Travelers Companies or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Travelers Companies vs. Armada Mercantile
Performance |
| Timeline |
| The Travelers Companies |
| Armada Mercantile |
Travelers Companies and Armada Mercantile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Armada Mercantile
The main advantage of trading using opposite Travelers Companies and Armada Mercantile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Armada Mercantile 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 Armada Mercantile will offset losses from the drop in Armada Mercantile's long position.| Travelers Companies vs. Argo Group International | Travelers Companies vs. Donegal Group A | Travelers Companies vs. Selective Insurance Group |
| Armada Mercantile vs. SPENN Technology AS | Armada Mercantile vs. OFX Group Ltd | Armada Mercantile vs. APAC Resources Limited | Armada Mercantile vs. Cypherpunk Holdings |
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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