Correlation Between Travelers Companies and HCI
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and HCI 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 HCI 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 HCI Group, you can compare the effects of market volatilities on Travelers Companies and HCI 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 HCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and HCI.
Diversification Opportunities for Travelers Companies and HCI
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and HCI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and HCI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCI Group 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 HCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCI Group has no effect on the direction of Travelers Companies i.e., Travelers Companies and HCI go up and down completely randomly.
Pair Corralation between Travelers Companies and HCI
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.62 times more return on investment than HCI. However, The Travelers Companies is 1.62 times less risky than HCI. It trades about 0.24 of its potential returns per unit of risk. HCI Group is currently generating about 0.05 per unit of risk. If you would invest 25,009 in The Travelers Companies on August 31, 2024 and sell it today you would earn a total of 1,657 from holding The Travelers Companies or generate 6.63% 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. HCI Group
Performance |
| Timeline |
| The Travelers Companies |
| HCI Group |
Travelers Companies and HCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and HCI
The main advantage of trading using opposite Travelers Companies and HCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, HCI 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 HCI will offset losses from the drop in HCI's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. CNA Financial |
| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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