Correlation Between Travelers Companies and Argo Group
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Argo Group 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 Argo Group 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 Argo Group International, you can compare the effects of market volatilities on Travelers Companies and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Argo Group.
Diversification Opportunities for Travelers Companies and Argo Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Argo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Argo Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group International 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group International has no effect on the direction of Travelers Companies i.e., Travelers Companies and Argo Group go up and down completely randomly.
Pair Corralation between Travelers Companies and Argo Group
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.33 times more return on investment than Argo Group. However, Travelers Companies is 1.33 times more volatile than Argo Group International. It trades about 0.06 of its potential returns per unit of risk. Argo Group International is currently generating about 0.04 per unit of risk. If you would invest 17,068 in The Travelers Companies on November 27, 2024 and sell it today you would earn a total of 7,756 from holding The Travelers Companies or generate 45.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Argo Group International
Performance |
| Timeline |
| The Travelers Companies |
| Argo Group International |
Travelers Companies and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Argo Group
The main advantage of trading using opposite Travelers Companies and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| Argo Group vs. Life Time Group | Argo Group vs. Summit Hotel Properties | Argo Group vs. Hasbro Inc | Argo Group vs. Small Cap Premium |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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