Correlation Between Travelers Companies and Komatsu
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Komatsu 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 Komatsu 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 Komatsu, you can compare the effects of market volatilities on Travelers Companies and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Komatsu.
Diversification Opportunities for Travelers Companies and Komatsu
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Komatsu is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Travelers Companies i.e., Travelers Companies and Komatsu go up and down completely randomly.
Pair Corralation between Travelers Companies and Komatsu
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.83 times more return on investment than Komatsu. However, The Travelers Companies is 1.2 times less risky than Komatsu. It trades about 0.06 of its potential returns per unit of risk. Komatsu is currently generating about 0.03 per unit of risk. If you would invest 17,960 in The Travelers Companies on August 24, 2024 and sell it today you would earn a total of 8,156 from holding The Travelers Companies or generate 45.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Komatsu
Performance |
| Timeline |
| The Travelers Companies |
| Komatsu |
Travelers Companies and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Komatsu
The main advantage of trading using opposite Travelers Companies and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Travelers Companies vs. Amtech Systems | Travelers Companies vs. Gold Fields Ltd | Travelers Companies vs. Aegean Airlines SA | Travelers Companies vs. Merck Company |
| Komatsu vs. Element Solutions | Komatsu vs. Orion Engineered Carbons | Komatsu vs. Minerals Technologies | Komatsu vs. Ingevity Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |