Correlation Between Travelers Companies and Columbia Moderate
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Columbia Moderate 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 Columbia Moderate 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 Columbia Moderate Growth, you can compare the effects of market volatilities on Travelers Companies and Columbia Moderate 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 Columbia Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Columbia Moderate.
Diversification Opportunities for Travelers Companies and Columbia Moderate
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Columbia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Columbia Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Moderate Growth 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 Columbia Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Moderate Growth has no effect on the direction of Travelers Companies i.e., Travelers Companies and Columbia Moderate go up and down completely randomly.
Pair Corralation between Travelers Companies and Columbia Moderate
Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.44 times more return on investment than Columbia Moderate. However, Travelers Companies is 2.44 times more volatile than Columbia Moderate Growth. It trades about 0.09 of its potential returns per unit of risk. Columbia Moderate Growth is currently generating about 0.09 per unit of risk. If you would invest 16,854 in The Travelers Companies on September 12, 2024 and sell it today you would earn a total of 7,911 from holding The Travelers Companies or generate 46.94% 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. Columbia Moderate Growth
Performance |
| Timeline |
| The Travelers Companies |
| Columbia Moderate Growth |
Travelers Companies and Columbia Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Columbia Moderate
The main advantage of trading using opposite Travelers Companies and Columbia Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Columbia Moderate 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 Columbia Moderate will offset losses from the drop in Columbia Moderate's long position.| Travelers Companies vs. Aeye Inc | Travelers Companies vs. Ep Emerging Markets | Travelers Companies vs. LiCycle Holdings Corp | Travelers Companies vs. SEI Investments |
| Columbia Moderate vs. Vanguard Total Stock | Columbia Moderate vs. Vanguard 500 Index | Columbia Moderate vs. Vanguard Total Stock | Columbia Moderate vs. Vanguard Total Stock |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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