Correlation Between Travelers Companies and Baron Capital
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Baron Capital 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 Baron Capital 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 Baron Capital, you can compare the effects of market volatilities on Travelers Companies and Baron Capital 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 Baron Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Baron Capital.
Diversification Opportunities for Travelers Companies and Baron Capital
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Travelers and Baron is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Baron Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Capital 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 Baron Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Capital has no effect on the direction of Travelers Companies i.e., Travelers Companies and Baron Capital go up and down completely randomly.
Pair Corralation between Travelers Companies and Baron Capital
Considering the 90-day investment horizon Travelers Companies is expected to generate 146.63 times less return on investment than Baron Capital. But when comparing it to its historical volatility, The Travelers Companies is 19.4 times less risky than Baron Capital. It trades about 0.01 of its potential returns per unit of risk. Baron Capital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Baron Capital on November 29, 2024 and sell it today you would earn a total of 0.00 from holding Baron Capital or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Travelers Companies vs. Baron Capital
Performance |
| Timeline |
| The Travelers Companies |
| Baron Capital |
Travelers Companies and Baron Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Baron Capital
The main advantage of trading using opposite Travelers Companies and Baron Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Baron Capital 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 Baron Capital will offset losses from the drop in Baron Capital's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| Baron Capital vs. Lincoln Electric Holdings | Baron Capital vs. Tencent Music Entertainment | Baron Capital vs. United Microelectronics | Baron Capital vs. Eltek |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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