Correlation Between Travelers Companies and 49456BAU5

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and 49456BAU5 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 49456BAU5 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 KMI 175 15 NOV 26, you can compare the effects of market volatilities on Travelers Companies and 49456BAU5 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 49456BAU5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and 49456BAU5.

Diversification Opportunities for Travelers Companies and 49456BAU5

0.15

Correlation Coefficient

Travelers Companies  49456BAU5

Average diversification

The 3 months correlation between Travelers and 49456BAU5 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and KMI 175 15 NOV 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMI 175 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 49456BAU5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMI 175 15 has no effect on the direction of Travelers Companies i.e., Travelers Companies and 49456BAU5 go up and down completely randomly.

Pair Corralation between Travelers Companies and 49456BAU5

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.91 times more return on investment than 49456BAU5. However, The Travelers Companies is 1.09 times less risky than 49456BAU5. It trades about -0.09 of its potential returns per unit of risk. KMI 175 15 NOV 26 is currently generating about -0.11 per unit of risk. If you would invest  25,289  in The Travelers Companies on October 7, 2024 and sell it today you would lose (1,060) from holding The Travelers Companies or give up 4.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

The Travelers Companies  vs.  KMI 175 15 NOV 26

The Travelers Companies

Risk-Adjusted Performance

6 of 100

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

KMI 175 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KMI 175 15 NOV 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49456BAU5 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 49456BAU5

The main advantage of trading using opposite Travelers Companies and 49456BAU5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, 49456BAU5 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 49456BAU5 will offset losses from the drop in 49456BAU5's long position.

The idea behind The Travelers Companies and KMI 175 15 NOV 26 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.