Correlation Between Travelers Companies and Electro Optic
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Electro Optic 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 Electro Optic 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 Electro Optic Systems, you can compare the effects of market volatilities on Travelers Companies and Electro Optic 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 Electro Optic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Electro Optic.
Diversification Opportunities for Travelers Companies and Electro Optic
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Electro is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Electro Optic Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Optic Systems 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 Electro Optic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Optic Systems has no effect on the direction of Travelers Companies i.e., Travelers Companies and Electro Optic go up and down completely randomly.
Pair Corralation between Travelers Companies and Electro Optic
Considering the 90-day investment horizon Travelers Companies is expected to generate 3.35 times less return on investment than Electro Optic. But when comparing it to its historical volatility, The Travelers Companies is 3.38 times less risky than Electro Optic. It trades about 0.06 of its potential returns per unit of risk. Electro Optic Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Electro Optic Systems on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Electro Optic Systems or generate 165.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Electro Optic Systems
Performance |
| Timeline |
| The Travelers Companies |
| Electro Optic Systems |
Travelers Companies and Electro Optic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Electro Optic
The main advantage of trading using opposite Travelers Companies and Electro Optic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Electro Optic 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 Electro Optic will offset losses from the drop in Electro Optic's long position.| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
| Electro Optic vs. Firan Technology Group | Electro Optic vs. 808 Renewable Energy | Electro Optic vs. Park Electrochemical | Electro Optic vs. Innovative Solutions and |
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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