Correlation Between Travelers Companies and Boardwalktech Software

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Boardwalktech Software 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 Boardwalktech Software 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 Boardwalktech Software Corp, you can compare the effects of market volatilities on Travelers Companies and Boardwalktech Software 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 Boardwalktech Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Boardwalktech Software.

Diversification Opportunities for Travelers Companies and Boardwalktech Software

0.64

Correlation Coefficient

Travelers Companies  Boardwalktech Software

Poor diversification

The 3 months correlation between Travelers and Boardwalktech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Boardwalktech Software Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boardwalktech Software 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 Boardwalktech Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boardwalktech Software has no effect on the direction of Travelers Companies i.e., Travelers Companies and Boardwalktech Software go up and down completely randomly.

Pair Corralation between Travelers Companies and Boardwalktech Software

Considering the 90-day investment horizon Travelers Companies is expected to generate 3.45 times less return on investment than Boardwalktech Software. But when comparing it to its historical volatility, The Travelers Companies is 6.08 times less risky than Boardwalktech Software. It trades about 0.15 of its potential returns per unit of risk. Boardwalktech Software Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.70  in Boardwalktech Software Corp on September 2, 2024 and sell it today you would earn a total of  1.90  from holding Boardwalktech Software Corp or generate 28.36% return on investment over 90 days.

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

The Travelers Companies  vs.  Boardwalktech Software Corp

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 inconsistent basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Boardwalktech Software

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boardwalktech Software Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward-looking signals, Boardwalktech Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Boardwalktech Software

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

The idea behind The Travelers Companies and Boardwalktech Software Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.