Correlation Between Travelers Companies and ProAssurance
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and ProAssurance 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 ProAssurance 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 ProAssurance, you can compare the effects of market volatilities on Travelers Companies and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and ProAssurance.
Diversification Opportunities for Travelers Companies and ProAssurance
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and ProAssurance is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Travelers Companies i.e., Travelers Companies and ProAssurance go up and down completely randomly.
Pair Corralation between Travelers Companies and ProAssurance
Considering the 90-day investment horizon Travelers Companies is expected to generate 2.57 times less return on investment than ProAssurance. But when comparing it to its historical volatility, The Travelers Companies is 2.04 times less risky than ProAssurance. It trades about 0.13 of its potential returns per unit of risk. ProAssurance is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,537 in ProAssurance on August 27, 2024 and sell it today you would earn a total of 138.00 from holding ProAssurance or generate 8.98% 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. ProAssurance
Performance |
| Timeline |
| The Travelers Companies |
| ProAssurance |
Travelers Companies and ProAssurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and ProAssurance
The main advantage of trading using opposite Travelers Companies and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance's long position.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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