Correlation Between Travelers Companies and First Northern
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and First Northern 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 First Northern 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 First Northern Community, you can compare the effects of market volatilities on Travelers Companies and First Northern 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 First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and First Northern.
Diversification Opportunities for Travelers Companies and First Northern
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Travelers and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community 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 First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Travelers Companies i.e., Travelers Companies and First Northern go up and down completely randomly.
Pair Corralation between Travelers Companies and First Northern
Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.41 times more return on investment than First Northern. However, Travelers Companies is 2.41 times more volatile than First Northern Community. It trades about 0.12 of its potential returns per unit of risk. First Northern Community is currently generating about -0.05 per unit of risk. If you would invest 24,089 in The Travelers Companies on December 2, 2024 and sell it today you would earn a total of 1,760 from holding The Travelers Companies or generate 7.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Travelers Companies vs. First Northern Community
Performance |
Timeline |
The Travelers Companies |
First Northern Community |
Travelers Companies and First Northern Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and First Northern
The main advantage of trading using opposite Travelers Companies and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, First Northern 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 First Northern will offset losses from the drop in First Northern's long position.Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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