Correlation Between Travelers Companies and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Plexus Corp 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 Plexus Corp 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 Plexus Corp, you can compare the effects of market volatilities on Travelers Companies and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Plexus Corp.
Diversification Opportunities for Travelers Companies and Plexus Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and Plexus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Plexus Corp go up and down completely randomly.
Pair Corralation between Travelers Companies and Plexus Corp
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.66 times less return on investment than Plexus Corp. But when comparing it to its historical volatility, The Travelers Companies is 2.13 times less risky than Plexus Corp. It trades about 0.24 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 14,658 in Plexus Corp on August 31, 2024 and sell it today you would earn a total of 1,575 from holding Plexus Corp or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Plexus Corp
Performance |
| Timeline |
| The Travelers Companies |
| Plexus Corp |
Travelers Companies and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Plexus Corp
The main advantage of trading using opposite Travelers Companies and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. Kemper |
| Plexus Corp vs. Sanmina | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Methode Electronics | Plexus Corp vs. Celestica |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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