Correlation Between United Fire and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both United Fire and Travelers Companies 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 United Fire and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and The Travelers Companies, you can compare the effects of market volatilities on United Fire and Travelers Companies 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 United Fire with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Travelers Companies.
Diversification Opportunities for United Fire and Travelers Companies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Travelers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and United Fire 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 United Fire Group are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of United Fire i.e., United Fire and Travelers Companies go up and down completely randomly.
Pair Corralation between United Fire and Travelers Companies
Given the investment horizon of 90 days United Fire Group is expected to generate 4.53 times more return on investment than Travelers Companies. However, United Fire is 4.53 times more volatile than The Travelers Companies. It trades about 0.35 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.13 per unit of risk. If you would invest 2,009 in United Fire Group on August 27, 2024 and sell it today you would earn a total of 980.00 from holding United Fire Group or generate 48.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. The Travelers Companies
Performance |
| Timeline |
| United Fire Group |
| The Travelers Companies |
United Fire and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Travelers Companies
The main advantage of trading using opposite United Fire and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |