Correlation Between Travelers Companies and Tema Oncology
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Tema Oncology 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 Tema Oncology 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 Tema Oncology ETF, you can compare the effects of market volatilities on Travelers Companies and Tema Oncology 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 Tema Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Tema Oncology.
Diversification Opportunities for Travelers Companies and Tema Oncology
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Tema is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Tema Oncology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema Oncology ETF 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 Tema Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema Oncology ETF has no effect on the direction of Travelers Companies i.e., Travelers Companies and Tema Oncology go up and down completely randomly.
Pair Corralation between Travelers Companies and Tema Oncology
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.15 times less return on investment than Tema Oncology. In addition to that, Travelers Companies is 1.22 times more volatile than Tema Oncology ETF. It trades about 0.07 of its total potential returns per unit of risk. Tema Oncology ETF is currently generating about 0.09 per unit of volatility. If you would invest 2,494 in Tema Oncology ETF on November 9, 2024 and sell it today you would earn a total of 61.00 from holding Tema Oncology ETF or generate 2.45% 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. Tema Oncology ETF
Performance |
| Timeline |
| The Travelers Companies |
| Tema Oncology ETF |
Travelers Companies and Tema Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Tema Oncology
The main advantage of trading using opposite Travelers Companies and Tema Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Tema Oncology 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 Tema Oncology will offset losses from the drop in Tema Oncology's long position.| Travelers Companies vs. Great Western Minerals | Travelers Companies vs. Enterprise Bancorp | Travelers Companies vs. T Rowe Price | Travelers Companies vs. Aviat Networks |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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