Correlation Between Travelers Companies and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Innovator Equity 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 Innovator Equity 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 Innovator Equity Premium, you can compare the effects of market volatilities on Travelers Companies and Innovator Equity 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 Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Innovator Equity.
Diversification Opportunities for Travelers Companies and Innovator Equity
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and Innovator is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Innovator Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Premium 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 Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Premium has no effect on the direction of Travelers Companies i.e., Travelers Companies and Innovator Equity go up and down completely randomly.
Pair Corralation between Travelers Companies and Innovator Equity
Considering the 90-day investment horizon The Travelers Companies is expected to generate 27.27 times more return on investment than Innovator Equity. However, Travelers Companies is 27.27 times more volatile than Innovator Equity Premium. It trades about 0.18 of its potential returns per unit of risk. Innovator Equity Premium is currently generating about 0.44 per unit of risk. If you would invest 25,050 in The Travelers Companies on August 26, 2024 and sell it today you would earn a total of 1,197 from holding The Travelers Companies or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Innovator Equity Premium
Performance |
| Timeline |
| The Travelers Companies |
| Innovator Equity Premium |
Travelers Companies and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Innovator Equity
The main advantage of trading using opposite Travelers Companies and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Innovator Equity 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 Innovator Equity will offset losses from the drop in Innovator Equity's long position.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
| Innovator Equity vs. First Trust Cboe | Innovator Equity vs. FT Cboe Vest | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. FT Cboe Vest |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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