Correlation Between Travelers Companies and Kaiser

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Kaiser 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 Kaiser 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 Kaiser Aluminum 4625, you can compare the effects of market volatilities on Travelers Companies and Kaiser 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 Kaiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Kaiser.

Diversification Opportunities for Travelers Companies and Kaiser

0.1

Correlation Coefficient

Travelers Companies  Kaiser

Average diversification

The 3 months correlation between Travelers and Kaiser is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Kaiser Aluminum 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 4625 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 Kaiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum 4625 has no effect on the direction of Travelers Companies i.e., Travelers Companies and Kaiser go up and down completely randomly.

Pair Corralation between Travelers Companies and Kaiser

Considering the 90-day investment horizon The Travelers Companies is expected to generate 4.58 times more return on investment than Kaiser. However, Travelers Companies is 4.58 times more volatile than Kaiser Aluminum 4625. It trades about 0.09 of its potential returns per unit of risk. Kaiser Aluminum 4625 is currently generating about 0.13 per unit of risk. If you would invest  24,189  in The Travelers Companies on December 24, 2024 and sell it today you would earn a total of  1,755  from holding The Travelers Companies or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

The Travelers Companies  vs.  Kaiser Aluminum 4625

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 unfluctuating basic indicators, Travelers Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kaiser Aluminum 4625

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum 4625 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kaiser is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and Kaiser

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

The idea behind The Travelers Companies and Kaiser Aluminum 4625 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.