Correlation Between AETNA and TravelCenters

Can any of the company-specific risk be diversified away by investing in both AETNA and TravelCenters 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 AETNA and TravelCenters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AETNA INC 7625 and TravelCenters Of America, you can compare the effects of market volatilities on AETNA and TravelCenters 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 AETNA with a short position of TravelCenters. Check out your portfolio center. Please also check ongoing floating volatility patterns of AETNA and TravelCenters.

Diversification Opportunities for AETNA and TravelCenters

-0.3

Correlation Coefficient

AETNA  TravelCenters

Very good diversification

The 3 months correlation between AETNA and TravelCenters is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AETNA INC 7625 and TravelCenters Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelCenters Of America and AETNA 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 AETNA INC 7625 are associated (or correlated) with TravelCenters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelCenters Of America has no effect on the direction of AETNA i.e., AETNA and TravelCenters go up and down completely randomly.

Pair Corralation between AETNA and TravelCenters

If you would invest  2,501  in TravelCenters Of America on September 16, 2024 and sell it today you would earn a total of  0.00  from holding TravelCenters Of America or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.17%
Values	Daily Returns

AETNA INC 7625  vs.  TravelCenters Of America

AETNA INC 7625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AETNA INC 7625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AETNA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TravelCenters Of America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TravelCenters Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TravelCenters is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AETNA and TravelCenters

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

The idea behind AETNA INC 7625 and TravelCenters Of America 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.