Correlation Between Travelers Companies and 466313AM5

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and 466313AM5 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 466313AM5 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 JBL 425 15 MAY 27, you can compare the effects of market volatilities on Travelers Companies and 466313AM5 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 466313AM5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and 466313AM5.

Diversification Opportunities for Travelers Companies and 466313AM5

-0.32

Correlation Coefficient

Travelers Companies  466313AM5

Very good diversification

The 3 months correlation between Travelers and 466313AM5 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and JBL 425 15 MAY 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBL 425 15 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 466313AM5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBL 425 15 has no effect on the direction of Travelers Companies i.e., Travelers Companies and 466313AM5 go up and down completely randomly.

Pair Corralation between Travelers Companies and 466313AM5

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the 466313AM5. In addition to that, Travelers Companies is 5.49 times more volatile than JBL 425 15 MAY 27. It trades about -0.04 of its total potential returns per unit of risk. JBL 425 15 MAY 27 is currently generating about -0.02 per unit of volatility. If you would invest  9,884  in JBL 425 15 MAY 27 on November 29, 2024 and sell it today you would lose (22.00) from holding JBL 425 15 MAY 27 or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

The Travelers Companies  vs.  JBL 425 15 MAY 27

The Travelers Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

JBL 425 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days JBL 425 15 MAY 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 466313AM5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and 466313AM5

The main advantage of trading using opposite Travelers Companies and 466313AM5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, 466313AM5 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 466313AM5 will offset losses from the drop in 466313AM5's long position.

The idea behind The Travelers Companies and JBL 425 15 MAY 27 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.