Correlation Between Travelers Companies and Icon Media

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

Diversification Opportunities for Travelers Companies and Icon Media

0.06

Correlation Coefficient

Travelers Companies  Icon Media

Significant diversification

The 3 months correlation between Travelers and Icon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Icon Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Media 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 Icon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Media Holdings has no effect on the direction of Travelers Companies i.e., Travelers Companies and Icon Media go up and down completely randomly.

Pair Corralation between Travelers Companies and Icon Media

Considering the 90-day investment horizon Travelers Companies is expected to generate 13.91 times less return on investment than Icon Media. But when comparing it to its historical volatility, The Travelers Companies is 13.26 times less risky than Icon Media. It trades about 0.11 of its potential returns per unit of risk. Icon Media Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Icon Media Holdings on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Icon Media Holdings or generate 50.0% return on investment over 90 days.

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

The Travelers Companies  vs.  Icon Media 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 9 (%) 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.

Icon Media Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Media Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Icon Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Icon Media

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

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