Correlation Between Travelers Companies and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and ProShares Ultra 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 ProShares Ultra 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 ProShares Ultra Russell2000, you can compare the effects of market volatilities on Travelers Companies and ProShares Ultra 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 ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and ProShares Ultra.

Diversification Opportunities for Travelers Companies and ProShares Ultra

0.7

Correlation Coefficient

Travelers Companies  ProShares Ultra

Poor diversification

The 3 months correlation between Travelers and ProShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and ProShares Ultra Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Russ 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 ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Russ has no effect on the direction of Travelers Companies i.e., Travelers Companies and ProShares Ultra go up and down completely randomly.

Pair Corralation between Travelers Companies and ProShares Ultra

Considering the 90-day investment horizon Travelers Companies is expected to generate 1.05 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, The Travelers Companies is 1.86 times less risky than ProShares Ultra. It trades about 0.05 of its potential returns per unit of risk. ProShares Ultra Russell2000 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,666  in ProShares Ultra Russell2000 on October 22, 2024 and sell it today you would earn a total of  674.00  from holding ProShares Ultra Russell2000 or generate 18.39% 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.  ProShares Ultra Russell2000

The Travelers Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ProShares Ultra Russ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Russell2000 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and ProShares Ultra

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

The idea behind The Travelers Companies and ProShares Ultra Russell2000 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..