Correlation Between Travelers Companies and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and SPDR SP 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 SPDR SP 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 SPDR SP Pharmaceuticals, you can compare the effects of market volatilities on Travelers Companies and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and SPDR SP.
Diversification Opportunities for Travelers Companies and SPDR SP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and SPDR SP Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Pharmaceuticals 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Pharmaceuticals has no effect on the direction of Travelers Companies i.e., Travelers Companies and SPDR SP go up and down completely randomly.
Pair Corralation between Travelers Companies and SPDR SP
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.99 times more return on investment than SPDR SP. However, The Travelers Companies is 1.01 times less risky than SPDR SP. It trades about 0.32 of its potential returns per unit of risk. SPDR SP Pharmaceuticals is currently generating about 0.02 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. SPDR SP Pharmaceuticals
Performance |
| Timeline |
| The Travelers Companies |
| SPDR SP Pharmaceuticals |
Travelers Companies and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and SPDR SP
The main advantage of trading using opposite Travelers Companies and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. iShares Pharmaceuticals ETF | SPDR SP vs. Invesco Dynamic Pharmaceuticals | SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Health |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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