Correlation Between Travelers Companies and Cargojet
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Cargojet 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 Cargojet 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 Cargojet, you can compare the effects of market volatilities on Travelers Companies and Cargojet 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 Cargojet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Cargojet.
Diversification Opportunities for Travelers Companies and Cargojet
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Cargojet is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet 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 Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of Travelers Companies i.e., Travelers Companies and Cargojet go up and down completely randomly.
Pair Corralation between Travelers Companies and Cargojet
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.57 times more return on investment than Cargojet. However, The Travelers Companies is 1.76 times less risky than Cargojet. It trades about 0.26 of its potential returns per unit of risk. Cargojet is currently generating about -0.28 per unit of risk. If you would invest 24,867 in The Travelers Companies on August 30, 2024 and sell it today you would earn a total of 1,799 from holding The Travelers Companies or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Cargojet
Performance |
| Timeline |
| The Travelers Companies |
| Cargojet |
Travelers Companies and Cargojet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Cargojet
The main advantage of trading using opposite Travelers Companies and Cargojet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Cargojet 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 Cargojet will offset losses from the drop in Cargojet's long position.| Travelers Companies vs. Axa Equitable Holdings | Travelers Companies vs. American International Group | Travelers Companies vs. Arch Capital Group | Travelers Companies vs. Sun Life Financial |
| Cargojet vs. Deere Company | Cargojet vs. Columbus McKinnon | Cargojet vs. Hyster Yale Materials Handling | Cargojet vs. Manitowoc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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