Correlation Between Travelers Companies and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and VanEck Oil 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 VanEck Oil 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 VanEck Oil Refiners, you can compare the effects of market volatilities on Travelers Companies and VanEck Oil 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 VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and VanEck Oil.
Diversification Opportunities for Travelers Companies and VanEck Oil
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and VanEck is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and VanEck Oil Refiners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Refiners 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Refiners has no effect on the direction of Travelers Companies i.e., Travelers Companies and VanEck Oil go up and down completely randomly.
Pair Corralation between Travelers Companies and VanEck Oil
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.2 times more return on investment than VanEck Oil. However, Travelers Companies is 1.2 times more volatile than VanEck Oil Refiners. It trades about 0.09 of its potential returns per unit of risk. VanEck Oil Refiners is currently generating about -0.04 per unit of risk. If you would invest 24,843 in The Travelers Companies on November 29, 2024 and sell it today you would earn a total of 583.00 from holding The Travelers Companies or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Travelers Companies vs. VanEck Oil Refiners
Performance |
| Timeline |
| The Travelers Companies |
| VanEck Oil Refiners |
Travelers Companies and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and VanEck Oil
The main advantage of trading using opposite Travelers Companies and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, VanEck Oil 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 VanEck Oil will offset losses from the drop in VanEck Oil'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 CEOs Directory module to screen CEOs from public companies around the world.
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