Correlation Between Travelers Companies and PIMCO RAFI
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and PIMCO RAFI 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 PIMCO RAFI 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 PIMCO RAFI Dynamic, you can compare the effects of market volatilities on Travelers Companies and PIMCO RAFI 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 PIMCO RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and PIMCO RAFI.
Diversification Opportunities for Travelers Companies and PIMCO RAFI
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and PIMCO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic 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 PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of Travelers Companies i.e., Travelers Companies and PIMCO RAFI go up and down completely randomly.
Pair Corralation between Travelers Companies and PIMCO RAFI
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.87 times more return on investment than PIMCO RAFI. However, Travelers Companies is 1.87 times more volatile than PIMCO RAFI Dynamic. It trades about 0.09 of its potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about 0.13 per unit of risk. If you would invest 17,036 in The Travelers Companies on September 4, 2024 and sell it today you would earn a total of 9,315 from holding The Travelers Companies or generate 54.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
The Travelers Companies vs. PIMCO RAFI Dynamic
Performance |
| Timeline |
| The Travelers Companies |
| PIMCO RAFI Dynamic |
Travelers Companies and PIMCO RAFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and PIMCO RAFI
The main advantage of trading using opposite Travelers Companies and PIMCO RAFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, PIMCO RAFI 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 PIMCO RAFI will offset losses from the drop in PIMCO RAFI's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley | Travelers Companies vs. The Allstate |
| PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. JPMorgan Diversified Return | PIMCO RAFI vs. JPMorgan Diversified Return |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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