Correlation Between Travelers Companies and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Bristol-Myers Squibb 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 Bristol-Myers Squibb 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 Bristol Myers Squibb, you can compare the effects of market volatilities on Travelers Companies and Bristol-Myers Squibb 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 Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Bristol-Myers Squibb.
Diversification Opportunities for Travelers Companies and Bristol-Myers Squibb
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Bristol-Myers is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb 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 Bristol-Myers Squibb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Travelers Companies i.e., Travelers Companies and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between Travelers Companies and Bristol-Myers Squibb
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.3 times more return on investment than Bristol-Myers Squibb. However, The Travelers Companies is 3.39 times less risky than Bristol-Myers Squibb. It trades about -0.01 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.09 per unit of risk. If you would invest 23,952 in The Travelers Companies on November 18, 2024 and sell it today you would lose (122.00) from holding The Travelers Companies or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 42.86% |
| Values | Daily Returns |
The Travelers Companies vs. Bristol Myers Squibb
Performance |
| Timeline |
| The Travelers Companies |
| Bristol Myers Squibb |
Travelers Companies and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Bristol-Myers Squibb
The main advantage of trading using opposite Travelers Companies and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Bristol-Myers Squibb 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 Bristol-Myers Squibb will offset losses from the drop in Bristol-Myers Squibb's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
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 Stocks Directory module to find actively traded stocks across global markets.
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