Correlation Between Travelers Companies and INC

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

Diversification Opportunities for Travelers Companies and INC

0.0

Correlation Coefficient

Travelers Companies  INC

Pay attention - limited upside

The 3 months correlation between Travelers and INC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC 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 INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC has no effect on the direction of Travelers Companies i.e., Travelers Companies and INC go up and down completely randomly.

Pair Corralation between Travelers Companies and INC

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Travelers Companies  vs.  INC

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.

INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Travelers Companies and INC

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

The idea behind The Travelers Companies and INC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.