Correlation Between WR Berkley and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both WR Berkley 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 WR Berkley and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WR Berkley and The Travelers Companies, you can compare the effects of market volatilities on WR Berkley 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 WR Berkley with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of WR Berkley and Travelers Companies.
Diversification Opportunities for WR Berkley and Travelers Companies
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WRB-PG and Travelers is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding WR Berkley 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 WR Berkley 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 WR Berkley 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 WR Berkley i.e., WR Berkley and Travelers Companies go up and down completely randomly.
Pair Corralation between WR Berkley and Travelers Companies
Assuming the 90 days trading horizon WR Berkley is expected to under-perform the Travelers Companies. But the preferred stock apears to be less risky and, when comparing its historical volatility, WR Berkley is 1.23 times less risky than Travelers Companies. The preferred stock trades about -0.09 of its potential returns per unit of risk. The The Travelers Companies is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 24,867 in The Travelers Companies on August 30, 2024 and sell it today you would earn a total of 1,799 from holding The Travelers Companies or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WR Berkley vs. The Travelers Companies
Performance |
| Timeline |
| WR Berkley |
| The Travelers Companies |
WR Berkley and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WR Berkley and Travelers Companies
The main advantage of trading using opposite WR Berkley and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WR Berkley 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.| WR Berkley vs. W R Berkley | WR Berkley vs. Southern Company Series | WR Berkley vs. Prudential Financial 4125 |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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