Correlation Between Travelers Companies and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Franklin Liberty 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 Franklin Liberty 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 Franklin Liberty Systematic, you can compare the effects of market volatilities on Travelers Companies and Franklin Liberty 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 Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Franklin Liberty.
Diversification Opportunities for Travelers Companies and Franklin Liberty
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Travelers and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Franklin Liberty Systematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Sys 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 Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Sys has no effect on the direction of Travelers Companies i.e., Travelers Companies and Franklin Liberty go up and down completely randomly.
Pair Corralation between Travelers Companies and Franklin Liberty
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.96 times more return on investment than Franklin Liberty. However, Travelers Companies is 1.96 times more volatile than Franklin Liberty Systematic. It trades about 0.32 of its potential returns per unit of risk. Franklin Liberty Systematic is currently generating about 0.1 per unit of risk. If you would invest 24,594 in The Travelers Companies on September 1, 2024 and sell it today you would earn a total of 2,010 from holding The Travelers Companies or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Franklin Liberty Systematic
Performance |
| Timeline |
| The Travelers Companies |
| Franklin Liberty Sys |
Travelers Companies and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Franklin Liberty
The main advantage of trading using opposite Travelers Companies and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Franklin Liberty 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 Franklin Liberty will offset losses from the drop in Franklin Liberty'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 |
| Franklin Liberty vs. Eaton Vance Enhanced | Franklin Liberty vs. Grayscale Ethereum Mini | Franklin Liberty vs. Intel | Franklin Liberty vs. The Travelers Companies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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