Correlation Between Travelers Companies and Sprott Physical

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

Diversification Opportunities for Travelers Companies and Sprott Physical

0.34

Correlation Coefficient

Travelers Companies  Sprott Physical

Weak diversification

The 3 months correlation between Travelers and Sprott is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Travelers Companies i.e., Travelers Companies and Sprott Physical go up and down completely randomly.

Pair Corralation between Travelers Companies and Sprott Physical

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Sprott Physical. In addition to that, Travelers Companies is 1.33 times more volatile than Sprott Physical Gold. It trades about -0.16 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.18 per unit of volatility. If you would invest  2,052  in Sprott Physical Gold on January 29, 2024 and sell it today you would earn a total of  112.00  from holding Sprott Physical Gold or generate 5.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Sprott Physical Gold

The Travelers Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) 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.

Sprott Physical Gold

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Sprott Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Sprott Physical

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

The idea behind The Travelers Companies and Sprott Physical Gold 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.