Correlation Between Travelers Companies and Invictus Energy

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

Diversification Opportunities for Travelers Companies and Invictus Energy

-0.21

Correlation Coefficient

Travelers Companies  Invictus Energy

Very good diversification

The 3 months correlation between Travelers and Invictus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Travelers Companies i.e., Travelers Companies and Invictus Energy go up and down completely randomly.

Pair Corralation between Travelers Companies and Invictus Energy

Considering the 90-day investment horizon Travelers Companies is expected to generate 2.51 times less return on investment than Invictus Energy. But when comparing it to its historical volatility, The Travelers Companies is 6.43 times less risky than Invictus Energy. It trades about 0.11 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.25  in Invictus Energy Limited on December 30, 2024 and sell it today you would earn a total of  0.04  from holding Invictus Energy Limited or generate 0.94% return on investment over 90 days.

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

The Travelers Companies  vs.  Invictus Energy Limited

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.

Invictus Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Invictus Energy

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

The idea behind The Travelers Companies and Invictus Energy Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..