Correlation Between Travelers Companies and PACIFIC

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

Diversification Opportunities for Travelers Companies and PACIFIC

0.15

Correlation Coefficient

Travelers Companies  PACIFIC

Average diversification

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

Pair Corralation between Travelers Companies and PACIFIC

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the PACIFIC. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 2.99 times less risky than PACIFIC. The stock trades about -0.09 of its potential returns per unit of risk. The PACIFIC GAS AND is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,750  in PACIFIC GAS AND on October 22, 2024 and sell it today you would earn a total of  2,153  from holding PACIFIC GAS AND or generate 24.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, PACIFIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and PACIFIC

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

The idea behind The Travelers Companies and PACIFIC GAS AND 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.