Correlation Between Travelers Companies and Inpex Corp

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

Diversification Opportunities for Travelers Companies and Inpex Corp

0.68

Correlation Coefficient

Travelers Companies  Inpex Corp

Poor diversification

The 3 months correlation between Travelers and Inpex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR 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 Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Travelers Companies i.e., Travelers Companies and Inpex Corp go up and down completely randomly.

Pair Corralation between Travelers Companies and Inpex Corp

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.84 times more return on investment than Inpex Corp. However, The Travelers Companies is 1.2 times less risky than Inpex Corp. It trades about 0.11 of its potential returns per unit of risk. Inpex Corp ADR is currently generating about 0.09 per unit of risk. If you would invest  23,889  in The Travelers Companies on December 29, 2024 and sell it today you would earn a total of  2,290  from holding The Travelers Companies or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Inpex Corp ADR

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.

Inpex Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inpex Corp ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Inpex Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Travelers Companies and Inpex Corp

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

The idea behind The Travelers Companies and Inpex Corp ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.