Correlation Between 78387GAQ6 and Travelers Companies

Can any of the company-specific risk be diversified away by investing in both 78387GAQ6 and Travelers Companies 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 78387GAQ6 and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBC MUNICATIONS INC and The Travelers Companies, you can compare the effects of market volatilities on 78387GAQ6 and Travelers Companies 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 78387GAQ6 with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78387GAQ6 and Travelers Companies.

Diversification Opportunities for 78387GAQ6 and Travelers Companies

0.28

Correlation Coefficient

78387GAQ6  Travelers Companies

Modest diversification

The 3 months correlation between 78387GAQ6 and Travelers is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBC MUNICATIONS INC and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and 78387GAQ6 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 SBC MUNICATIONS INC are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of 78387GAQ6 i.e., 78387GAQ6 and Travelers Companies go up and down completely randomly.

Pair Corralation between 78387GAQ6 and Travelers Companies

Assuming the 90 days trading horizon SBC MUNICATIONS INC is expected to under-perform the Travelers Companies. In addition to that, 78387GAQ6 is 1.3 times more volatile than The Travelers Companies. It trades about -0.14 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.09 per unit of volatility. If you would invest  24,909  in The Travelers Companies on December 1, 2024 and sell it today you would earn a total of  570.00  from holding The Travelers Companies or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

SBC MUNICATIONS INC  vs.  The Travelers Companies

SBC MUNICATIONS INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBC MUNICATIONS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SBC MUNICATIONS INC investors.

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.

Pair Trading with 78387GAQ6 and Travelers Companies

The main advantage of trading using opposite 78387GAQ6 and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78387GAQ6 position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.

The idea behind SBC MUNICATIONS INC and The Travelers Companies 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.