Correlation Between Travelers Companies and Cabana Target
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Cabana Target 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 Cabana Target 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 Cabana Target Drawdown, you can compare the effects of market volatilities on Travelers Companies and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Cabana Target.
Diversification Opportunities for Travelers Companies and Cabana Target
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and Cabana is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Travelers Companies i.e., Travelers Companies and Cabana Target go up and down completely randomly.
Pair Corralation between Travelers Companies and Cabana Target
Considering the 90-day investment horizon The Travelers Companies is expected to generate 4.18 times more return on investment than Cabana Target. However, Travelers Companies is 4.18 times more volatile than Cabana Target Drawdown. It trades about 0.07 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.07 per unit of risk. If you would invest 19,320 in The Travelers Companies on November 9, 2024 and sell it today you would earn a total of 5,444 from holding The Travelers Companies or generate 28.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Cabana Target Drawdown
Performance |
| Timeline |
| The Travelers Companies |
| Cabana Target Drawdown |
Travelers Companies and Cabana Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Cabana Target
The main advantage of trading using opposite Travelers Companies and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Cabana Target 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 Cabana Target will offset losses from the drop in Cabana Target'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 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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