Correlation Between Travelers Companies and Madison Covered
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Madison Covered 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 Madison Covered 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 Madison Ered Call, you can compare the effects of market volatilities on Travelers Companies and Madison Covered 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 Madison Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Madison Covered.
Diversification Opportunities for Travelers Companies and Madison Covered
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Madison is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Madison Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Ered Call 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 Madison Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Ered Call has no effect on the direction of Travelers Companies i.e., Travelers Companies and Madison Covered go up and down completely randomly.
Pair Corralation between Travelers Companies and Madison Covered
Considering the 90-day investment horizon The Travelers Companies is expected to generate 3.35 times more return on investment than Madison Covered. However, Travelers Companies is 3.35 times more volatile than Madison Ered Call. It trades about 0.07 of its potential returns per unit of risk. Madison Ered Call is currently generating about 0.09 per unit of risk. If you would invest 24,288 in The Travelers Companies on October 25, 2024 and sell it today you would earn a total of 384.00 from holding The Travelers Companies or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Madison Ered Call
Performance |
| Timeline |
| The Travelers Companies |
| Madison Ered Call |
Travelers Companies and Madison Covered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Madison Covered
The main advantage of trading using opposite Travelers Companies and Madison Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Madison Covered 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 Madison Covered will offset losses from the drop in Madison Covered's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| Madison Covered vs. Victory High Yield | Madison Covered vs. Msift High Yield | Madison Covered vs. T Rowe Price | Madison Covered vs. Prudential High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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