Correlation Between Travelers Companies and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and IShares Healthcare 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 Healthcare 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 Healthcare ETF, you can compare the effects of market volatilities on Travelers Companies and IShares Healthcare 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 Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and IShares Healthcare.
Diversification Opportunities for Travelers Companies and IShares Healthcare
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and IShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and iShares Healthcare ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare ETF 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare ETF has no effect on the direction of Travelers Companies i.e., Travelers Companies and IShares Healthcare go up and down completely randomly.
Pair Corralation between Travelers Companies and IShares Healthcare
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.93 times more return on investment than IShares Healthcare. However, Travelers Companies is 1.93 times more volatile than iShares Healthcare ETF. It trades about 0.06 of its potential returns per unit of risk. iShares Healthcare ETF is currently generating about 0.02 per unit of risk. If you would invest 18,184 in The Travelers Companies on August 23, 2024 and sell it today you would earn a total of 7,897 from holding The Travelers Companies or generate 43.43% 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 Healthcare ETF
Performance |
| Timeline |
| The Travelers Companies |
| iShares Healthcare ETF |
Travelers Companies and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and IShares Healthcare
The main advantage of trading using opposite Travelers Companies and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, IShares Healthcare 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 Healthcare will offset losses from the drop in IShares Healthcare's long position.| Travelers Companies vs. Small Cap Core | Travelers Companies vs. FitLife Brands, Common | Travelers Companies vs. Mutual Of America | Travelers Companies vs. Gfl Environmental Holdings |
| IShares Healthcare vs. iShares Financials ETF | IShares Healthcare vs. iShares Consumer Discretionary | IShares Healthcare vs. iShares Industrials ETF | IShares Healthcare vs. iShares Consumer Staples |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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