Correlation Between Loews Corp and Transcontinental

Can any of the company-specific risk be diversified away by investing in both Loews Corp and Transcontinental 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 Loews Corp and Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loews Corp and Transcontinental Realty Investors, you can compare the effects of market volatilities on Loews Corp and Transcontinental 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 Loews Corp with a short position of Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Transcontinental.

Diversification Opportunities for Loews Corp and Transcontinental

-0.16

Correlation Coefficient

Loews Corp  Transcontinental

Good diversification

The 3 months correlation between Loews and Transcontinental is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Transcontinental Realty Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental Realty and Loews Corp 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 Loews Corp are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental Realty has no effect on the direction of Loews Corp i.e., Loews Corp and Transcontinental go up and down completely randomly.

Pair Corralation between Loews Corp and Transcontinental

Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.52 times more return on investment than Transcontinental. However, Loews Corp is 1.94 times less risky than Transcontinental. It trades about 0.07 of its potential returns per unit of risk. Transcontinental Realty Investors is currently generating about 0.0 per unit of risk. If you would invest  8,331  in Loews Corp on December 22, 2024 and sell it today you would earn a total of  394.00  from holding Loews Corp or generate 4.73% return on investment over 90 days.

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

Loews Corp  vs.  Transcontinental Realty Invest

Loews Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Transcontinental Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcontinental Realty Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Transcontinental is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Loews Corp and Transcontinental

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

The idea behind Loews Corp and Transcontinental Realty Investors 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.