Correlation Between Value Exchange and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Value Exchange 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 Value Exchange and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Exchange International and The Travelers Companies, you can compare the effects of market volatilities on Value Exchange 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 Value Exchange with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Exchange and Travelers Companies.
Diversification Opportunities for Value Exchange and Travelers Companies
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Value and Travelers is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Value Exchange International 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 Value Exchange 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 Value Exchange International 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 Value Exchange i.e., Value Exchange and Travelers Companies go up and down completely randomly.
Pair Corralation between Value Exchange and Travelers Companies
Given the investment horizon of 90 days Value Exchange International is expected to generate 30.9 times more return on investment than Travelers Companies. However, Value Exchange is 30.9 times more volatile than The Travelers Companies. It trades about 0.13 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 4.50 in Value Exchange International on September 2, 2024 and sell it today you would earn a total of 1.50 from holding Value Exchange International or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Exchange International vs. The Travelers Companies
Performance |
| Timeline |
| Value Exchange Inter |
| The Travelers Companies |
Value Exchange and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Exchange and Travelers Companies
The main advantage of trading using opposite Value Exchange and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Exchange 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.| Value Exchange vs. Appen Limited | Value Exchange vs. Appen Limited | Value Exchange vs. Deveron Corp | Value Exchange vs. Direct Communication Solutions |
| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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