Correlation Between Travelers Companies and First Trust
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and First Trust 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 Trust 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 Trust Growth, you can compare the effects of market volatilities on Travelers Companies and First Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and First Trust.
Diversification Opportunities for Travelers Companies and First Trust
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and First Trust Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Growth 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Growth has no effect on the direction of Travelers Companies i.e., Travelers Companies and First Trust go up and down completely randomly.
Pair Corralation between Travelers Companies and First Trust
Considering the 90-day investment horizon Travelers Companies is expected to generate 18.31 times less return on investment than First Trust. But when comparing it to its historical volatility, The Travelers Companies is 1.15 times less risky than First Trust. It trades about 0.01 of its potential returns per unit of risk. First Trust Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,016 in First Trust Growth on March 27, 2025 and sell it today you would earn a total of 328.00 from holding First Trust Growth or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. First Trust Growth
Performance |
| Timeline |
| The Travelers Companies |
| First Trust Growth |
Travelers Companies and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and First Trust
The main advantage of trading using opposite Travelers Companies and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, First Trust 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 Trust will offset losses from the drop in First Trust's long position.| Travelers Companies vs. Axa Equitable Holdings | Travelers Companies vs. American International Group | Travelers Companies vs. Arch Capital Group | Travelers Companies vs. Sun Life Financial |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. JPMorgan Fundamental Data |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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