Correlation Between Travelers Companies and Pacer Developed
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Pacer Developed 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 Pacer Developed 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 Pacer Developed Markets, you can compare the effects of market volatilities on Travelers Companies and Pacer Developed 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 Pacer Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Pacer Developed.
Diversification Opportunities for Travelers Companies and Pacer Developed
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Pacer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Pacer Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Developed Markets 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 Pacer Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Developed Markets has no effect on the direction of Travelers Companies i.e., Travelers Companies and Pacer Developed go up and down completely randomly.
Pair Corralation between Travelers Companies and Pacer Developed
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.57 times more return on investment than Pacer Developed. However, Travelers Companies is 1.57 times more volatile than Pacer Developed Markets. It trades about 0.1 of its potential returns per unit of risk. Pacer Developed Markets is currently generating about 0.03 per unit of risk. If you would invest 17,049 in The Travelers Companies on August 31, 2024 and sell it today you would earn a total of 9,555 from holding The Travelers Companies or generate 56.04% 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. Pacer Developed Markets
Performance |
| Timeline |
| The Travelers Companies |
| Pacer Developed Markets |
Travelers Companies and Pacer Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Pacer Developed
The main advantage of trading using opposite Travelers Companies and Pacer Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Pacer Developed 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 Pacer Developed will offset losses from the drop in Pacer Developed's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. CNA Financial |
| Pacer Developed vs. Pacer Global Cash | Pacer Developed vs. Pacer Small Cap | Pacer Developed vs. Pacer Emerging Markets | Pacer Developed vs. Pacer Cash Cows |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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