Correlation Between Travelers Companies and Internet Infinity

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

Diversification Opportunities for Travelers Companies and Internet Infinity

-0.68

Correlation Coefficient

Travelers Companies  Internet Infinity

Excellent diversification

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

Pair Corralation between Travelers Companies and Internet Infinity

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.15 times more return on investment than Internet Infinity. However, The Travelers Companies is 6.81 times less risky than Internet Infinity. It trades about 0.08 of its potential returns per unit of risk. Internet Infinity is currently generating about -0.06 per unit of risk. If you would invest  24,038  in The Travelers Companies on December 23, 2024 and sell it today you would earn a total of  1,632  from holding The Travelers Companies or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

The Travelers Companies  vs.  Internet Infinity

The Travelers Companies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Travelers Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Internet Infinity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Infinity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Travelers Companies and Internet Infinity

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

The idea behind The Travelers Companies and Internet Infinity 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.