Correlation Between United Parcel and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and The Travelers Companies, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Travelers Companies.
Diversification Opportunities for United Parcel and Travelers Companies
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Travelers is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service 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 United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Travelers Companies go up and down completely randomly.
Pair Corralation between United Parcel and Travelers Companies
Considering the 90-day investment horizon United Parcel Service is expected to under-perform the Travelers Companies. In addition to that, United Parcel is 1.21 times more volatile than The Travelers Companies. It trades about -0.03 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.05 per unit of volatility. If you would invest 17,911 in The Travelers Companies on January 25, 2024 and sell it today you would earn a total of 3,521 from holding The Travelers Companies or generate 19.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. The Travelers Companies
Performance |
| Timeline |
| United Parcel Service |
| The Travelers Companies |
United Parcel and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Travelers Companies
The main advantage of trading using opposite United Parcel and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.| United Parcel vs. JB Hunt Transport | United Parcel vs. Aquagold International | United Parcel vs. Thrivent High Yield | United Parcel vs. Morningstar Unconstrained Allocation |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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