Correlation Between Travelers Companies and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on Travelers Companies and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Dimensional ETF.
Diversification Opportunities for Travelers Companies and Dimensional ETF
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Travelers and Dimensional is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Travelers Companies i.e., Travelers Companies and Dimensional ETF go up and down completely randomly.
Pair Corralation between Travelers Companies and Dimensional ETF
Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Dimensional ETF. In addition to that, Travelers Companies is 1.88 times more volatile than Dimensional ETF Trust. It trades about -0.01 of its total potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.35 per unit of volatility. If you would invest 2,456 in Dimensional ETF Trust on November 18, 2024 and sell it today you would earn a total of 141.00 from holding Dimensional ETF Trust or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Dimensional ETF Trust
Performance |
| Timeline |
| The Travelers Companies |
| Dimensional ETF Trust |
Travelers Companies and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Dimensional ETF
The main advantage of trading using opposite Travelers Companies and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional International High | Dimensional ETF vs. Dimensional Small Cap |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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