Correlation Between Travelers Companies and Galp Energia
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Galp Energia 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 Galp Energia 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 Galp Energia SGPS, you can compare the effects of market volatilities on Travelers Companies and Galp Energia 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 Galp Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Galp Energia.
Diversification Opportunities for Travelers Companies and Galp Energia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Travelers and Galp is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Galp Energia SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energia SGPS 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 Galp Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energia SGPS has no effect on the direction of Travelers Companies i.e., Travelers Companies and Galp Energia go up and down completely randomly.
Pair Corralation between Travelers Companies and Galp Energia
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.69 times more return on investment than Galp Energia. However, The Travelers Companies is 1.45 times less risky than Galp Energia. It trades about 0.06 of its potential returns per unit of risk. Galp Energia SGPS is currently generating about -0.04 per unit of risk. If you would invest 23,313 in The Travelers Companies on September 12, 2024 and sell it today you would earn a total of 1,452 from holding The Travelers Companies or generate 6.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Travelers Companies vs. Galp Energia SGPS
Performance |
Timeline |
The Travelers Companies |
Galp Energia SGPS |
Travelers Companies and Galp Energia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and Galp Energia
The main advantage of trading using opposite Travelers Companies and Galp Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Galp Energia 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 Galp Energia will offset losses from the drop in Galp Energia's long position.Travelers Companies vs. Aeye Inc | Travelers Companies vs. Ep Emerging Markets | Travelers Companies vs. LiCycle Holdings Corp | Travelers Companies vs. SEI Investments |
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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 Stocks Directory module to find actively traded stocks across global markets.
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