Correlation Between Travelers Companies and Goodness Growth
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Goodness Growth 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 Goodness Growth 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 Goodness Growth Holdings, you can compare the effects of market volatilities on Travelers Companies and Goodness Growth 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 Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Goodness Growth.
Diversification Opportunities for Travelers Companies and Goodness Growth
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Goodness is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Travelers Companies i.e., Travelers Companies and Goodness Growth go up and down completely randomly.
Pair Corralation between Travelers Companies and Goodness Growth
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.19 times more return on investment than Goodness Growth. However, The Travelers Companies is 5.37 times less risky than Goodness Growth. It trades about 0.16 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.17 per unit of risk. If you would invest 25,237 in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of 1,140 from holding The Travelers Companies or generate 4.52% 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. Goodness Growth Holdings
Performance |
Timeline |
The Travelers Companies |
Goodness Growth Holdings |
Travelers Companies and Goodness Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and Goodness Growth
The main advantage of trading using opposite Travelers Companies and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Goodness Growth 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 Goodness Growth will offset losses from the drop in Goodness Growth's long position.Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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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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