Correlation Between Travelers Companies and American Century
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and American Century 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 American Century 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 American Century ETF, you can compare the effects of market volatilities on Travelers Companies and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and American Century.
Diversification Opportunities for Travelers Companies and American Century
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of Travelers Companies i.e., Travelers Companies and American Century go up and down completely randomly.
Pair Corralation between Travelers Companies and American Century
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.89 times more return on investment than American Century. However, Travelers Companies is 1.89 times more volatile than American Century ETF. It trades about 0.13 of its potential returns per unit of risk. American Century ETF is currently generating about 0.13 per unit of risk. If you would invest 20,839 in The Travelers Companies on September 1, 2024 and sell it today you would earn a total of 5,765 from holding The Travelers Companies or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
The Travelers Companies vs. American Century ETF
Performance |
| Timeline |
| The Travelers Companies |
| American Century ETF |
Travelers Companies and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and American Century
The main advantage of trading using opposite Travelers Companies and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
| American Century vs. Vanguard Total Stock | American Century vs. SPDR SP 500 | American Century vs. iShares Core SP | American Century vs. Vanguard Dividend Appreciation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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