Correlation Between Travelers Companies and Butler National
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Butler National 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 Butler National 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 Butler National Corp, you can compare the effects of market volatilities on Travelers Companies and Butler National 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 Butler National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Butler National.
Diversification Opportunities for Travelers Companies and Butler National
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Butler is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Butler National Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Butler National Corp 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 Butler National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Butler National Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Butler National go up and down completely randomly.
Pair Corralation between Travelers Companies and Butler National
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.61 times more return on investment than Butler National. However, The Travelers Companies is 1.65 times less risky than Butler National. It trades about -0.03 of its potential returns per unit of risk. Butler National Corp is currently generating about -0.02 per unit of risk. If you would invest 24,136 in The Travelers Companies on October 23, 2024 and sell it today you would lose (184.00) from holding The Travelers Companies or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Butler National Corp
Performance |
| Timeline |
| The Travelers Companies |
| Butler National Corp |
Travelers Companies and Butler National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Butler National
The main advantage of trading using opposite Travelers Companies and Butler National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Butler National 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 Butler National will offset losses from the drop in Butler National's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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