Correlation Between Travelers Companies and Madison ETFs

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Madison ETFs 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 Madison ETFs 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 Madison ETFs Trust, you can compare the effects of market volatilities on Travelers Companies and Madison ETFs 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 Madison ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Madison ETFs.

Diversification Opportunities for Travelers Companies and Madison ETFs

0.79

Correlation Coefficient

Travelers Companies  Madison ETFs

Poor diversification

The 3 months correlation between Travelers and Madison is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Madison ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison ETFs Trust 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 Madison ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison ETFs Trust has no effect on the direction of Travelers Companies i.e., Travelers Companies and Madison ETFs go up and down completely randomly.

Pair Corralation between Travelers Companies and Madison ETFs

Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.35 times more return on investment than Madison ETFs. However, Travelers Companies is 2.35 times more volatile than Madison ETFs Trust. It trades about 0.05 of its potential returns per unit of risk. Madison ETFs Trust is currently generating about -0.05 per unit of risk. If you would invest  23,051  in The Travelers Companies on October 9, 2024 and sell it today you would earn a total of  1,117  from holding The Travelers Companies or generate 4.85% 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.  Madison ETFs Trust

The Travelers Companies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Madison ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Madison ETFs is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Travelers Companies and Madison ETFs

The main advantage of trading using opposite Travelers Companies and Madison ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Madison ETFs 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 Madison ETFs will offset losses from the drop in Madison ETFs' long position.

The idea behind The Travelers Companies and Madison ETFs Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.