Correlation Between Travelers Companies and Goodness Growth

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

Diversification Opportunities for Travelers Companies and Goodness Growth

-0.63

Correlation Coefficient

Travelers Companies  Goodness Growth

Excellent diversification

The 3 months correlation between Travelers and Goodness is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Travelers Companies i.e., Travelers Companies and Goodness Growth go up and down completely randomly.

Pair Corralation between Travelers Companies and Goodness Growth

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.21 times more return on investment than Goodness Growth. However, The Travelers Companies is 4.75 times less risky than Goodness Growth. It trades about 0.11 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.01 per unit of risk. If you would invest  24,043  in The Travelers Companies on December 27, 2024 and sell it today you would earn a total of  2,225  from holding The Travelers Companies or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

The Travelers Companies  vs.  Goodness Growth Holdings

The Travelers Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Travelers Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goodness Growth Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodness Growth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Goodness Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Travelers Companies and Goodness Growth

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

The idea behind The Travelers Companies and Goodness Growth Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.