Correlation Between Travelers Companies and NSANY

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and NSANY 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 NSANY 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 NSANY 481 17 SEP 30, you can compare the effects of market volatilities on Travelers Companies and NSANY 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 NSANY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and NSANY.

Diversification Opportunities for Travelers Companies and NSANY

-0.37

Correlation Coefficient

Travelers Companies  NSANY

Very good diversification

The 3 months correlation between Travelers and NSANY is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and NSANY 481 17 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSANY 481 17 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 NSANY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSANY 481 17 has no effect on the direction of Travelers Companies i.e., Travelers Companies and NSANY go up and down completely randomly.

Pair Corralation between Travelers Companies and NSANY

Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.15 times more return on investment than NSANY. However, Travelers Companies is 2.15 times more volatile than NSANY 481 17 SEP 30. It trades about 0.05 of its potential returns per unit of risk. NSANY 481 17 SEP 30 is currently generating about -0.04 per unit of risk. If you would invest  20,765  in The Travelers Companies on October 22, 2024 and sell it today you would earn a total of  3,187  from holding The Travelers Companies or generate 15.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.11%
Values	Daily Returns

The Travelers Companies  vs.  NSANY 481 17 SEP 30

The Travelers Companies

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

NSANY 481 17

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSANY 481 17 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NSANY 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 NSANY

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

The idea behind The Travelers Companies and NSANY 481 17 SEP 30 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.