Correlation Between Recursion Pharmaceuticals and TRAVELERS

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

By analyzing existing cross correlation between Recursion Pharmaceuticals and TRAVELERS INC 625, you can compare the effects of market volatilities on Recursion Pharmaceuticals and TRAVELERS 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 Recursion Pharmaceuticals with a short position of TRAVELERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recursion Pharmaceuticals and TRAVELERS.

Diversification Opportunities for Recursion Pharmaceuticals and TRAVELERS

-0.03

Correlation Coefficient

Recursion Pharmaceuticals  TRAVELERS

Good diversification

The 3 months correlation between Recursion and TRAVELERS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Recursion Pharmaceuticals and TRAVELERS INC 625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVELERS INC 625 and Recursion Pharmaceuticals 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 Recursion Pharmaceuticals are associated (or correlated) with TRAVELERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVELERS INC 625 has no effect on the direction of Recursion Pharmaceuticals i.e., Recursion Pharmaceuticals and TRAVELERS go up and down completely randomly.

Pair Corralation between Recursion Pharmaceuticals and TRAVELERS

Given the investment horizon of 90 days Recursion Pharmaceuticals is expected to generate 4.7 times more return on investment than TRAVELERS. However, Recursion Pharmaceuticals is 4.7 times more volatile than TRAVELERS INC 625. It trades about 0.04 of its potential returns per unit of risk. TRAVELERS INC 625 is currently generating about -0.08 per unit of risk. If you would invest  665.00  in Recursion Pharmaceuticals on September 16, 2024 and sell it today you would earn a total of  30.00  from holding Recursion Pharmaceuticals or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Recursion Pharmaceuticals  vs.  TRAVELERS INC 625

Recursion Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Recursion Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Recursion Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

TRAVELERS INC 625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRAVELERS INC 625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRAVELERS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Recursion Pharmaceuticals and TRAVELERS

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

The idea behind Recursion Pharmaceuticals and TRAVELERS INC 625 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.