Correlation Between Travelers Companies and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and AIM ETF 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 AIM ETF 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 AIM ETF Products, you can compare the effects of market volatilities on Travelers Companies and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and AIM ETF.
Diversification Opportunities for Travelers Companies and AIM ETF
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and AIM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Travelers Companies i.e., Travelers Companies and AIM ETF go up and down completely randomly.
Pair Corralation between Travelers Companies and AIM ETF
Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.84 times more return on investment than AIM ETF. However, Travelers Companies is 2.84 times more volatile than AIM ETF Products. It trades about 0.32 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.34 per unit of risk. If you would invest 24,594 in The Travelers Companies on September 1, 2024 and sell it today you would earn a total of 2,010 from holding The Travelers Companies or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Travelers Companies vs. AIM ETF Products
Performance |
| Timeline |
| The Travelers Companies |
| AIM ETF Products |
Travelers Companies and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and AIM ETF
The main advantage of trading using opposite Travelers Companies and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF's 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 |
| AIM ETF vs. Innovator ETFs Trust | AIM ETF vs. First Trust Cboe | AIM ETF vs. Innovator SP 500 | AIM ETF vs. Innovator SP 500 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Directory Find actively traded commodities issued by global exchanges |