Correlation Between Travelers Companies and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and BE Semiconductor 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 BE Semiconductor 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 BE Semiconductor Industries, you can compare the effects of market volatilities on Travelers Companies and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and BE Semiconductor.
Diversification Opportunities for Travelers Companies and BE Semiconductor
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Travelers and BESIY is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Travelers Companies i.e., Travelers Companies and BE Semiconductor go up and down completely randomly.
Pair Corralation between Travelers Companies and BE Semiconductor
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.86 times less return on investment than BE Semiconductor. But when comparing it to its historical volatility, The Travelers Companies is 2.12 times less risky than BE Semiconductor. It trades about 0.06 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,328 in BE Semiconductor Industries on August 24, 2024 and sell it today you would earn a total of 4,952 from holding BE Semiconductor Industries or generate 78.26% 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. BE Semiconductor Industries
Performance |
| Timeline |
| The Travelers Companies |
| BE Semiconductor Ind |
Travelers Companies and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and BE Semiconductor
The main advantage of trading using opposite Travelers Companies and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Travelers Companies vs. Amtech Systems | Travelers Companies vs. Gold Fields Ltd | Travelers Companies vs. Aegean Airlines SA | Travelers Companies vs. Merck Company |
| BE Semiconductor vs. Lasertec | BE Semiconductor vs. Tokyo Electron Ltd | BE Semiconductor vs. Asm Pacific Technology | BE Semiconductor vs. Sumco Corp ADR |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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