Correlation Between Travelers Companies and IShares Blockchain

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

Diversification Opportunities for Travelers Companies and IShares Blockchain

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Travelers and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and iShares Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and 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 IShares Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of Travelers Companies i.e., Travelers Companies and IShares Blockchain go up and down completely randomly.

Pair Corralation between Travelers Companies and IShares Blockchain

Considering the 90-day investment horizon Travelers Companies is expected to generate 4.36 times less return on investment than IShares Blockchain. But when comparing it to its historical volatility, The Travelers Companies is 2.88 times less risky than IShares Blockchain. It trades about 0.04 of its potential returns per unit of risk. iShares Blockchain and is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,387  in iShares Blockchain and on October 4, 2024 and sell it today you would earn a total of  2,163  from holding iShares Blockchain and or generate 155.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  iShares Blockchain and

 Performance 
       Timeline  
The Travelers Companies 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
iShares Blockchain and 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Travelers Companies and IShares Blockchain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and IShares Blockchain

The main advantage of trading using opposite Travelers Companies and IShares Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, IShares Blockchain 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 IShares Blockchain will offset losses from the drop in IShares Blockchain's long position.
The idea behind The Travelers Companies and iShares Blockchain and 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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