Correlation Between Travelers Companies and Black Mountain
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Black Mountain 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 Mountain 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 Mountain Acquisition, you can compare the effects of market volatilities on Travelers Companies and Black Mountain 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 Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Black Mountain.
Diversification Opportunities for Travelers Companies and Black Mountain
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Black is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Black Mountain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Mountain Acqui 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 Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Mountain Acqui has no effect on the direction of Travelers Companies i.e., Travelers Companies and Black Mountain go up and down completely randomly.
Pair Corralation between Travelers Companies and Black Mountain
Considering the 90-day investment horizon The Travelers Companies is expected to generate 7.22 times more return on investment than Black Mountain. However, Travelers Companies is 7.22 times more volatile than Black Mountain Acquisition. It trades about 0.06 of its potential returns per unit of risk. Black Mountain Acquisition is currently generating about 0.15 per unit of risk. If you would invest 17,899 in The Travelers Companies on August 30, 2024 and sell it today you would earn a total of 8,767 from holding The Travelers Companies or generate 48.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.11% |
| Values | Daily Returns |
The Travelers Companies vs. Black Mountain Acquisition
Performance |
| Timeline |
| The Travelers Companies |
| Black Mountain Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and Black Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Black Mountain
The main advantage of trading using opposite Travelers Companies and Black Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Black Mountain 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 Mountain will offset losses from the drop in Black Mountain's long position.| Travelers Companies vs. Argo Group International | Travelers Companies vs. Donegal Group A | Travelers Companies vs. Selective Insurance Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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