Correlation Between Travelers Companies and CROWN

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

Diversification Opportunities for Travelers Companies and CROWN

-0.42

Correlation Coefficient

Travelers Companies  CROWN

Very good diversification

The 3 months correlation between Travelers and CROWN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Travelers Companies i.e., Travelers Companies and CROWN go up and down completely randomly.

Pair Corralation between Travelers Companies and CROWN

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the CROWN. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 2.36 times less risky than CROWN. The stock trades about -0.28 of its potential returns per unit of risk. The CROWN CASTLE INTERNATIONAL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,974  in CROWN CASTLE INTERNATIONAL on October 4, 2024 and sell it today you would earn a total of  289.00  from holding CROWN CASTLE INTERNATIONAL or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

The Travelers Companies  vs.  CROWN CASTLE INTERNATIONAL

The Travelers Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and CROWN

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

The idea behind The Travelers Companies and CROWN CASTLE INTERNATIONAL 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.