Correlation Between Travelers Companies and Novo Resources
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Novo Resources 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 Novo Resources 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 Novo Resources Corp, you can compare the effects of market volatilities on Travelers Companies and Novo Resources 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 Novo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Novo Resources.
Diversification Opportunities for Travelers Companies and Novo Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and Novo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Novo Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Resources Corp 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 Novo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Resources Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Novo Resources go up and down completely randomly.
Pair Corralation between Travelers Companies and Novo Resources
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.26 times more return on investment than Novo Resources. However, The Travelers Companies is 3.85 times less risky than Novo Resources. It trades about 0.06 of its potential returns per unit of risk. Novo Resources Corp is currently generating about -0.03 per unit of risk. If you would invest 18,099 in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of 8,278 from holding The Travelers Companies or generate 45.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Novo Resources Corp
Performance |
| Timeline |
| The Travelers Companies |
| Novo Resources Corp |
Travelers Companies and Novo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Novo Resources
The main advantage of trading using opposite Travelers Companies and Novo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Novo Resources 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 Novo Resources will offset losses from the drop in Novo Resources' long position.| Travelers Companies vs. Global Indemnity PLC | Travelers Companies vs. Argo Group International | Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. NI Holdings |
| Novo Resources vs. Lion One Metals | Novo Resources vs. Irving Resources | Novo Resources vs. Eloro Resources | Novo Resources vs. Eskay Mining 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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