Correlation Between Travelers Companies and Sparta Commercial
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Sparta Commercial 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 Sparta Commercial 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 Sparta Commercial Services, you can compare the effects of market volatilities on Travelers Companies and Sparta Commercial 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 Sparta Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Sparta Commercial.
Diversification Opportunities for Travelers Companies and Sparta Commercial
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Travelers and Sparta is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Sparta Commercial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Commercial 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 Sparta Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Commercial has no effect on the direction of Travelers Companies i.e., Travelers Companies and Sparta Commercial go up and down completely randomly.
Pair Corralation between Travelers Companies and Sparta Commercial
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.22 times more return on investment than Sparta Commercial. However, The Travelers Companies is 4.61 times less risky than Sparta Commercial. It trades about 0.24 of its potential returns per unit of risk. Sparta Commercial Services is currently generating about -0.12 per unit of risk. If you would invest 25,009 in The Travelers Companies on August 31, 2024 and sell it today you would earn a total of 1,657 from holding The Travelers Companies or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Sparta Commercial Services
Performance |
| Timeline |
| The Travelers Companies |
| Sparta Commercial |
Travelers Companies and Sparta Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Sparta Commercial
The main advantage of trading using opposite Travelers Companies and Sparta Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Sparta Commercial 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 Sparta Commercial will offset losses from the drop in Sparta Commercial's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. CNA Financial |
| Sparta Commercial vs. RIWI Corp | Sparta Commercial vs. ProStar Holdings | Sparta Commercial vs. Rego Payment Architectures | Sparta Commercial vs. Red Violet |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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