Correlation Between Live Ventures and Travelers Companies

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

By analyzing existing cross correlation between Live Ventures and The Travelers Companies, you can compare the effects of market volatilities on Live Ventures 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 Live Ventures with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Ventures and Travelers Companies.

Diversification Opportunities for Live Ventures and Travelers Companies

-0.84

Correlation Coefficient

Live Ventures  Travelers Companies

Pay attention - limited upside

The 3 months correlation between Live and Travelers is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures 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 Live Ventures 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 Live Ventures 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 Live Ventures i.e., Live Ventures and Travelers Companies go up and down completely randomly.

Pair Corralation between Live Ventures and Travelers Companies

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Travelers Companies. In addition to that, Live Ventures is 2.38 times more volatile than The Travelers Companies. It trades about -0.04 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.06 per unit of volatility. If you would invest  18,034  in The Travelers Companies on September 3, 2024 and sell it today you would earn a total of  8,570  from holding The Travelers Companies or generate 47.52% return on investment over 90 days.

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

Live Ventures  vs.  The Travelers Companies

Live Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

The Travelers Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Ventures and Travelers Companies

The main advantage of trading using opposite Live Ventures and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures 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.

The idea behind Live Ventures and The Travelers Companies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.