Correlation Between Travelers Companies and IShares SP
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on Travelers Companies and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and IShares SP.
Diversification Opportunities for Travelers Companies and IShares SP
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Travelers Companies i.e., Travelers Companies and IShares SP go up and down completely randomly.
Pair Corralation between Travelers Companies and IShares SP
Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the IShares SP. In addition to that, Travelers Companies is 1.94 times more volatile than iShares SP 500. It trades about -0.29 of its total potential returns per unit of risk. iShares SP 500 is currently generating about -0.23 per unit of volatility. If you would invest 20,047 in iShares SP 500 on September 18, 2024 and sell it today you would lose (570.00) from holding iShares SP 500 or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. iShares SP 500
Performance |
| Timeline |
| The Travelers Companies |
| iShares SP 500 |
Travelers Companies and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and IShares SP
The main advantage of trading using opposite Travelers Companies and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| Travelers Companies vs. W R Berkley | Travelers Companies vs. Markel | Travelers Companies vs. RLI Corp | Travelers Companies vs. White Mountains Insurance |
| IShares SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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