Correlation Between Travelers Companies and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and OceanaGold 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 OceanaGold 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 OceanaGold, you can compare the effects of market volatilities on Travelers Companies and OceanaGold 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 OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and OceanaGold.
Diversification Opportunities for Travelers Companies and OceanaGold
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and OceanaGold is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Travelers Companies i.e., Travelers Companies and OceanaGold go up and down completely randomly.
Pair Corralation between Travelers Companies and OceanaGold
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.99 times less return on investment than OceanaGold. But when comparing it to its historical volatility, The Travelers Companies is 2.17 times less risky than OceanaGold. It trades about 0.05 of its potential returns per unit of risk. OceanaGold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 189.00 in OceanaGold on September 12, 2024 and sell it today you would earn a total of 125.00 from holding OceanaGold or generate 66.14% 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. OceanaGold
Performance |
| Timeline |
| The Travelers Companies |
| OceanaGold |
Travelers Companies and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and OceanaGold
The main advantage of trading using opposite Travelers Companies and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Travelers Companies vs. Aeye Inc | Travelers Companies vs. Ep Emerging Markets | Travelers Companies vs. LiCycle Holdings Corp | Travelers Companies vs. SEI Investments |
| OceanaGold vs. Cache Exploration | OceanaGold vs. Evolution Mining | OceanaGold vs. Northern Star Resources | OceanaGold vs. Wesdome Gold Mines |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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