Correlation Between Travelers Companies and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and IShares Trust 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 IShares Trust 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 iShares Trust, you can compare the effects of market volatilities on Travelers Companies and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and IShares Trust.
Diversification Opportunities for Travelers Companies and IShares Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Travelers Companies i.e., Travelers Companies and IShares Trust go up and down completely randomly.
Pair Corralation between Travelers Companies and IShares Trust
Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.57 times more return on investment than IShares Trust. However, Travelers Companies is 2.57 times more volatile than iShares Trust. It trades about 0.4 of its potential returns per unit of risk. iShares Trust is currently generating about 0.16 per unit of risk. If you would invest 24,281 in The Travelers Companies on September 3, 2024 and sell it today you would earn a total of 2,323 from holding The Travelers Companies or generate 9.57% 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. iShares Trust
Performance |
| Timeline |
| The Travelers Companies |
| iShares Trust |
Travelers Companies and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and IShares Trust
The main advantage of trading using opposite Travelers Companies and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Travelers Companies vs. SPACE | Travelers Companies vs. Ampleforth | Travelers Companies vs. ionet | Travelers Companies vs. KIN |
| IShares Trust vs. VanEck Vectors Moodys | IShares Trust vs. Xtrackers California Municipal | IShares Trust vs. Vanguard ESG Corporate | IShares Trust vs. Vanguard Intermediate Term Corporate |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |