Correlation Between Travelers Companies and PT Bank
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and PT Bank 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 PT Bank 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 PT Bank Rakyat, you can compare the effects of market volatilities on Travelers Companies and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and PT Bank.
Diversification Opportunities for Travelers Companies and PT Bank
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and BKRKF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Travelers Companies i.e., Travelers Companies and PT Bank go up and down completely randomly.
Pair Corralation between Travelers Companies and PT Bank
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.24 times more return on investment than PT Bank. However, The Travelers Companies is 4.14 times less risky than PT Bank. It trades about 0.11 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.02 per unit of risk. If you would invest 17,850 in The Travelers Companies on August 27, 2024 and sell it today you would earn a total of 8,397 from holding The Travelers Companies or generate 47.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.08% |
| Values | Daily Returns |
The Travelers Companies vs. PT Bank Rakyat
Performance |
| Timeline |
| The Travelers Companies |
| PT Bank Rakyat |
Travelers Companies and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and PT Bank
The main advantage of trading using opposite Travelers Companies and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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