Correlation Between Travelers Companies and MedMira
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and MedMira 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 MedMira 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 MedMira, you can compare the effects of market volatilities on Travelers Companies and MedMira 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 MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and MedMira.
Diversification Opportunities for Travelers Companies and MedMira
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and MedMira is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Travelers Companies i.e., Travelers Companies and MedMira go up and down completely randomly.
Pair Corralation between Travelers Companies and MedMira
Considering the 90-day investment horizon Travelers Companies is expected to generate 91.07 times less return on investment than MedMira. But when comparing it to its historical volatility, The Travelers Companies is 51.05 times less risky than MedMira. It trades about 0.06 of its potential returns per unit of risk. MedMira is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5.00 in MedMira on August 25, 2024 and sell it today you would earn a total of 0.74 from holding MedMira or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Travelers Companies vs. MedMira
Performance |
| Timeline |
| The Travelers Companies |
| MedMira |
Travelers Companies and MedMira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and MedMira
The main advantage of trading using opposite Travelers Companies and MedMira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, MedMira 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 MedMira will offset losses from the drop in MedMira's long position.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
| MedMira vs. Oxford Cannabinoid Technologies | MedMira vs. Pharming Group NV | MedMira vs. Kane Biotech | MedMira vs. Health Sciences Gr |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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