Correlation Between Travelers Companies and First Trust
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and First Trust 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 First Trust 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 First Trust Rising, you can compare the effects of market volatilities on Travelers Companies and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and First Trust.
Diversification Opportunities for Travelers Companies and First Trust
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and First Trust Rising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Rising 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Rising has no effect on the direction of Travelers Companies i.e., Travelers Companies and First Trust go up and down completely randomly.
Pair Corralation between Travelers Companies and First Trust
Considering the 90-day investment horizon Travelers Companies is expected to generate 2.02 times less return on investment than First Trust. In addition to that, Travelers Companies is 2.12 times more volatile than First Trust Rising. It trades about 0.07 of its total potential returns per unit of risk. First Trust Rising is currently generating about 0.28 per unit of volatility. If you would invest 5,986 in First Trust Rising on November 9, 2024 and sell it today you would earn a total of 277.00 from holding First Trust Rising or generate 4.63% 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. First Trust Rising
Performance |
| Timeline |
| The Travelers Companies |
| First Trust Rising |
Travelers Companies and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and First Trust
The main advantage of trading using opposite Travelers Companies and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Travelers Companies vs. Great Western Minerals | Travelers Companies vs. Enterprise Bancorp | Travelers Companies vs. T Rowe Price | Travelers Companies vs. Aviat Networks |
| First Trust vs. First Trust Capital | First Trust vs. First Trust Value | First Trust vs. First Trust SMID | First Trust vs. First Trust Global |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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