Correlation Between Travelers Companies and Black Iron
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Black Iron 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 Black Iron 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 Black Iron, you can compare the effects of market volatilities on Travelers Companies and Black Iron 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 Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Black Iron.
Diversification Opportunities for Travelers Companies and Black Iron
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Black is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron 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 Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of Travelers Companies i.e., Travelers Companies and Black Iron go up and down completely randomly.
Pair Corralation between Travelers Companies and Black Iron
Considering the 90-day investment horizon Travelers Companies is expected to generate 10.5 times less return on investment than Black Iron. But when comparing it to its historical volatility, The Travelers Companies is 19.76 times less risky than Black Iron. It trades about 0.32 of its potential returns per unit of risk. Black Iron is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3.60 in Black Iron on September 1, 2024 and sell it today you would earn a total of 2.20 from holding Black Iron or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Black Iron
Performance |
| Timeline |
| The Travelers Companies |
| Black Iron |
Travelers Companies and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Black Iron
The main advantage of trading using opposite Travelers Companies and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron'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 |
| Black Iron vs. South32 Limited | Black Iron vs. NioCorp Developments Ltd | Black Iron vs. HUMANA INC | Black Iron vs. SCOR PK |
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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