Correlation Between Travelers Companies and Knorr-Bremse Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha 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 Knorr Bremse Aktiengesellschaft, you can compare the effects of market volatilities on Travelers Companies and Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Knorr-Bremse Aktiengesellscha.
Diversification Opportunities for Travelers Companies and Knorr-Bremse Aktiengesellscha
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Knorr-Bremse is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Travelers Companies i.e., Travelers Companies and Knorr-Bremse Aktiengesellscha go up and down completely randomly.
Pair Corralation between Travelers Companies and Knorr-Bremse Aktiengesellscha
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.88 times more return on investment than Knorr-Bremse Aktiengesellscha. However, The Travelers Companies is 1.14 times less risky than Knorr-Bremse Aktiengesellscha. It trades about 0.11 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about 0.07 per unit of risk. If you would invest 17,984 in The Travelers Companies on September 4, 2024 and sell it today you would earn a total of 8,367 from holding The Travelers Companies or generate 46.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Travelers Companies vs. Knorr Bremse Aktiengesellschaf
Performance |
| Timeline |
| The Travelers Companies |
| Knorr-Bremse Aktiengesellscha |
Travelers Companies and Knorr-Bremse Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Knorr-Bremse Aktiengesellscha
The main advantage of trading using opposite Travelers Companies and Knorr-Bremse Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha will offset losses from the drop in Knorr-Bremse Aktiengesellscha's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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