Correlation Between Travelers Companies and First Keystone
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and First Keystone 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 First Keystone 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 First Keystone Corp, you can compare the effects of market volatilities on Travelers Companies and First Keystone 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 First Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and First Keystone.
Diversification Opportunities for Travelers Companies and First Keystone
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone Corp 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 First Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and First Keystone go up and down completely randomly.
Pair Corralation between Travelers Companies and First Keystone
Considering the 90-day investment horizon Travelers Companies is expected to generate 4.56 times less return on investment than First Keystone. But when comparing it to its historical volatility, The Travelers Companies is 4.05 times less risky than First Keystone. It trades about 0.32 of its potential returns per unit of risk. First Keystone Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,175 in First Keystone Corp on September 1, 2024 and sell it today you would earn a total of 477.00 from holding First Keystone Corp or generate 40.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. First Keystone Corp
Performance |
| Timeline |
| The Travelers Companies |
| First Keystone Corp |
Travelers Companies and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and First Keystone
The main advantage of trading using opposite Travelers Companies and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, First Keystone 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 First Keystone will offset losses from the drop in First Keystone'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 |
| First Keystone vs. HUMANA INC | First Keystone vs. SCOR PK | First Keystone vs. Aquagold International | First Keystone vs. Thrivent High Yield |
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 Correlations module to find global opportunities by holding instruments from different markets.
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