Correlation Between Travelers Companies and Ridgeworth Seix

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

Diversification Opportunities for Travelers Companies and Ridgeworth Seix

-0.65

Correlation Coefficient

Travelers Companies  Ridgeworth Seix

Excellent diversification

The 3 months correlation between Travelers and Ridgeworth is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Ridgeworth Seix Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Seix Porate 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 Ridgeworth Seix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Seix Porate has no effect on the direction of Travelers Companies i.e., Travelers Companies and Ridgeworth Seix go up and down completely randomly.

Pair Corralation between Travelers Companies and Ridgeworth Seix

Considering the 90-day investment horizon The Travelers Companies is expected to generate 4.75 times more return on investment than Ridgeworth Seix. However, Travelers Companies is 4.75 times more volatile than Ridgeworth Seix Porate. It trades about 0.15 of its potential returns per unit of risk. Ridgeworth Seix Porate is currently generating about -0.02 per unit of risk. If you would invest  22,688  in The Travelers Companies on September 2, 2024 and sell it today you would earn a total of  3,916  from holding The Travelers Companies or generate 17.26% return on investment over 90 days.

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

The Travelers Companies  vs.  Ridgeworth Seix Porate

The Travelers Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Ridgeworth Seix Porate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ridgeworth Seix Porate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ridgeworth Seix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and Ridgeworth Seix

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

The idea behind The Travelers Companies and Ridgeworth Seix Porate 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.