Correlation Between Travelers Companies and Galane Gold
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Galane Gold 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 Galane Gold 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 Galane Gold, you can compare the effects of market volatilities on Travelers Companies and Galane Gold 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 Galane Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Galane Gold.
Diversification Opportunities for Travelers Companies and Galane Gold
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Galane is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Galane Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galane Gold 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 Galane Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galane Gold has no effect on the direction of Travelers Companies i.e., Travelers Companies and Galane Gold go up and down completely randomly.
Pair Corralation between Travelers Companies and Galane Gold
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.55 times less return on investment than Galane Gold. But when comparing it to its historical volatility, The Travelers Companies is 4.86 times less risky than Galane Gold. It trades about 0.32 of its potential returns per unit of risk. Galane Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Galane Gold on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Galane Gold or generate 9.52% 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. Galane Gold
Performance |
| Timeline |
| The Travelers Companies |
| Galane Gold |
Travelers Companies and Galane Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Galane Gold
The main advantage of trading using opposite Travelers Companies and Galane Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Galane Gold 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 Galane Gold will offset losses from the drop in Galane Gold'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 |
| Galane Gold vs. South32 Limited | Galane Gold vs. NioCorp Developments Ltd | Galane Gold vs. HUMANA INC | Galane Gold vs. SCOR PK |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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