Correlation Between Travelers Companies and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Dimensional International 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 International 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 International Value, you can compare the effects of market volatilities on Travelers Companies and Dimensional International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Dimensional International.
Diversification Opportunities for Travelers Companies and Dimensional International
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Dimensional is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Dimensional International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Travelers Companies i.e., Travelers Companies and Dimensional International go up and down completely randomly.
Pair Corralation between Travelers Companies and Dimensional International
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.62 times more return on investment than Dimensional International. However, Travelers Companies is 1.62 times more volatile than Dimensional International Value. It trades about 0.06 of its potential returns per unit of risk. Dimensional International Value is currently generating about 0.06 per unit of risk. If you would invest 17,899 in The Travelers Companies on August 30, 2024 and sell it today you would earn a total of 8,767 from holding The Travelers Companies or generate 48.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Dimensional International Valu
Performance |
| Timeline |
| The Travelers Companies |
| Dimensional International |
Travelers Companies and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Dimensional International
The main advantage of trading using opposite Travelers Companies and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Dimensional International 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 International will offset losses from the drop in Dimensional International's long position.| Travelers Companies vs. Argo Group International | Travelers Companies vs. Donegal Group A | Travelers Companies vs. Selective Insurance Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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