Correlation Between Travelers Companies and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and IShares MSCI 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 IShares MSCI 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 iShares MSCI United, you can compare the effects of market volatilities on Travelers Companies and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and IShares MSCI.
Diversification Opportunities for Travelers Companies and IShares MSCI
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and iShares MSCI United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI United 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI United has no effect on the direction of Travelers Companies i.e., Travelers Companies and IShares MSCI go up and down completely randomly.
Pair Corralation between Travelers Companies and IShares MSCI
Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.3 times more return on investment than IShares MSCI. However, Travelers Companies is 2.3 times more volatile than iShares MSCI United. It trades about 0.16 of its potential returns per unit of risk. iShares MSCI United is currently generating about -0.14 per unit of risk. If you would invest 22,085 in The Travelers Companies on August 23, 2024 and sell it today you would earn a total of 3,996 from holding The Travelers Companies or generate 18.09% 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. iShares MSCI United
Performance |
| Timeline |
| The Travelers Companies |
| iShares MSCI United |
Travelers Companies and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and IShares MSCI
The main advantage of trading using opposite Travelers Companies and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Travelers Companies vs. Small Cap Core | Travelers Companies vs. FitLife Brands, Common | Travelers Companies vs. Mutual Of America | Travelers Companies vs. Gfl Environmental Holdings |
| IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI Germany | IShares MSCI vs. iShares MSCI Switzerland |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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