Correlation Between Alleghany and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Alleghany 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 Alleghany and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alleghany and The Travelers Companies, you can compare the effects of market volatilities on Alleghany 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 Alleghany with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alleghany and Travelers Companies.
Diversification Opportunities for Alleghany and Travelers Companies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alleghany and Travelers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alleghany 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 Alleghany 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 Alleghany 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 Alleghany i.e., Alleghany and Travelers Companies go up and down completely randomly.
Pair Corralation between Alleghany and Travelers Companies
If you would invest 84,779 in Alleghany on January 24, 2024 and sell it today you would earn a total of 0.00 from holding Alleghany or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Alleghany vs. The Travelers Companies
Performance |
| Timeline |
| Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| The Travelers Companies |
Alleghany and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alleghany and Travelers Companies
The main advantage of trading using opposite Alleghany and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alleghany 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.| Alleghany vs. AerSale Corp | Alleghany vs. Valhi Inc | Alleghany vs. Grupo Aeroportuario del | Alleghany vs. Fair Isaac |
| Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation | Travelers Companies vs. Via Renewables |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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