Correlation Between Travelers Companies and Dfa Short

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

Diversification Opportunities for Travelers Companies and Dfa Short

-0.58

Correlation Coefficient

Travelers Companies  Dfa Short

Excellent diversification

The 3 months correlation between Travelers and Dfa is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Dfa Short Term Extended in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Short Term 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 Dfa Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Short Term has no effect on the direction of Travelers Companies i.e., Travelers Companies and Dfa Short go up and down completely randomly.

Pair Corralation between Travelers Companies and Dfa Short

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Dfa Short. In addition to that, Travelers Companies is 19.58 times more volatile than Dfa Short Term Extended. It trades about -0.02 of its total potential returns per unit of risk. Dfa Short Term Extended is currently generating about 0.25 per unit of volatility. If you would invest  1,040  in Dfa Short Term Extended on May 7, 2025 and sell it today you would earn a total of  11.00  from holding Dfa Short Term Extended or generate 1.06% return on investment over 90 days.

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

The Travelers Companies  vs.  Dfa Short Term Extended

The Travelers Companies

Risk-Adjusted Performance

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 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.

Dfa Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Short Term Extended are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and Dfa Short

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

The idea behind The Travelers Companies and Dfa Short Term Extended 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.