Correlation Between Travelers Companies and Vinci SA

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

Diversification Opportunities for Travelers Companies and Vinci SA

-0.03

Correlation Coefficient

Travelers Companies  Vinci SA

Good diversification

The 3 months correlation between Travelers and Vinci is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Vinci SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA ADR 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA ADR has no effect on the direction of Travelers Companies i.e., Travelers Companies and Vinci SA go up and down completely randomly.

Pair Corralation between Travelers Companies and Vinci SA

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Vinci SA. In addition to that, Travelers Companies is 1.12 times more volatile than Vinci SA ADR. It trades about -0.01 of its total potential returns per unit of risk. Vinci SA ADR is currently generating about 0.15 per unit of volatility. If you would invest  2,555  in Vinci SA ADR on December 1, 2024 and sell it today you would earn a total of  308.00  from holding Vinci SA ADR or generate 12.05% return on investment over 90 days.

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

The Travelers Companies  vs.  Vinci SA ADR

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.

Vinci SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vinci SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Travelers Companies and Vinci SA

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

The idea behind The Travelers Companies and Vinci SA ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.