Correlation Between Travelers Companies and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Strategy Shares 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 Strategy Shares 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 Strategy Shares, you can compare the effects of market volatilities on Travelers Companies and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Strategy Shares.
Diversification Opportunities for Travelers Companies and Strategy Shares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and Strategy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Travelers Companies i.e., Travelers Companies and Strategy Shares go up and down completely randomly.
Pair Corralation between Travelers Companies and Strategy Shares
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.22 times more return on investment than Strategy Shares. However, Travelers Companies is 1.22 times more volatile than Strategy Shares. It trades about 0.06 of its potential returns per unit of risk. Strategy Shares is currently generating about 0.05 per unit of risk. If you would invest 18,040 in The Travelers Companies on September 2, 2024 and sell it today you would earn a total of 8,564 from holding The Travelers Companies or generate 47.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.05% |
| Values | Daily Returns |
The Travelers Companies vs. Strategy Shares
Performance |
| Timeline |
| The Travelers Companies |
| Strategy Shares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Strategy Shares
The main advantage of trading using opposite Travelers Companies and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' long position.| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
| Strategy Shares vs. Vanguard Growth Index | Strategy Shares vs. iShares Russell 1000 | Strategy Shares vs. iShares SP 500 | Strategy Shares vs. iShares Core SP |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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