Correlation Between Travelers Companies and First Ottawa
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and First Ottawa 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 Ottawa 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 Ottawa Bancshares, you can compare the effects of market volatilities on Travelers Companies and First Ottawa 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 Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and First Ottawa.
Diversification Opportunities for Travelers Companies and First Ottawa
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and First is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares 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 Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of Travelers Companies i.e., Travelers Companies and First Ottawa go up and down completely randomly.
Pair Corralation between Travelers Companies and First Ottawa
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.92 times more return on investment than First Ottawa. However, The Travelers Companies is 1.09 times less risky than First Ottawa. It trades about 0.06 of its potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.02 per unit of risk. If you would invest 18,099 in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of 8,567 from holding The Travelers Companies or generate 47.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.77% |
| Values | Daily Returns |
The Travelers Companies vs. First Ottawa Bancshares
Performance |
| Timeline |
| The Travelers Companies |
| First Ottawa Bancshares |
Travelers Companies and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and First Ottawa
The main advantage of trading using opposite Travelers Companies and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, First Ottawa 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 Ottawa will offset losses from the drop in First Ottawa's long position.| Travelers Companies vs. Argo Group International | Travelers Companies vs. Donegal Group A | Travelers Companies vs. Selective Insurance Group |
| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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