Correlation Between Travelers Companies and Invesco SP

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

Diversification Opportunities for Travelers Companies and Invesco SP

-0.26

Correlation Coefficient

Travelers Companies  Invesco SP

Very good diversification

The 3 months correlation between Travelers and Invesco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of Travelers Companies i.e., Travelers Companies and Invesco SP go up and down completely randomly.

Pair Corralation between Travelers Companies and Invesco SP

Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.27 times more return on investment than Invesco SP. However, Travelers Companies is 1.27 times more volatile than Invesco SP SmallCap. It trades about 0.0 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about -0.23 per unit of risk. If you would invest  26,216  in The Travelers Companies on December 5, 2024 and sell it today you would lose (132.00) from holding The Travelers Companies or give up 0.5% of portfolio value over 90 days.

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

The Travelers Companies  vs.  Invesco SP SmallCap

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.

Invesco SP SmallCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SP SmallCap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Travelers Companies and Invesco SP

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

The idea behind The Travelers Companies and Invesco SP SmallCap 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.