Correlation Between TRAVELERS and BOS Better

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

By analyzing existing cross correlation between TRAVELERS INC 625 and BOS Better Online, you can compare the effects of market volatilities on TRAVELERS and BOS Better 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 with a short position of BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVELERS and BOS Better.

Diversification Opportunities for TRAVELERS and BOS Better

-0.12

Correlation Coefficient

TRAVELERS  BOS Better

Good diversification

The 3 months correlation between TRAVELERS and BOS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding TRAVELERS INC 625 and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online and TRAVELERS 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 TRAVELERS INC 625 are associated (or correlated) with BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of TRAVELERS i.e., TRAVELERS and BOS Better go up and down completely randomly.

Pair Corralation between TRAVELERS and BOS Better

Assuming the 90 days trading horizon TRAVELERS INC 625 is expected to under-perform the BOS Better. But the bond apears to be less risky and, when comparing its historical volatility, TRAVELERS INC 625 is 1.17 times less risky than BOS Better. The bond trades about -0.07 of its potential returns per unit of risk. The BOS Better Online is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  287.00  in BOS Better Online on September 17, 2024 and sell it today you would earn a total of  58.00  from holding BOS Better Online or generate 20.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

TRAVELERS INC 625  vs.  BOS Better Online

TRAVELERS INC 625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRAVELERS INC 625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRAVELERS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BOS Better Online

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVELERS and BOS Better

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

The idea behind TRAVELERS INC 625 and BOS Better Online 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.