Correlation Between TRAVELERS and Vistra Energy

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

By analyzing existing cross correlation between TRAVELERS INC 405 and Vistra Energy Corp, you can compare the effects of market volatilities on TRAVELERS and Vistra Energy 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 Vistra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVELERS and Vistra Energy.

Diversification Opportunities for TRAVELERS and Vistra Energy

-0.42

Correlation Coefficient

TRAVELERS  Vistra Energy

Very good diversification

The 3 months correlation between TRAVELERS and Vistra is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding TRAVELERS INC 405 and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp 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 405 are associated (or correlated) with Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of TRAVELERS i.e., TRAVELERS and Vistra Energy go up and down completely randomly.

Pair Corralation between TRAVELERS and Vistra Energy

Assuming the 90 days trading horizon TRAVELERS is expected to generate 5.88 times less return on investment than Vistra Energy. In addition to that, TRAVELERS is 1.29 times more volatile than Vistra Energy Corp. It trades about 0.02 of its total potential returns per unit of risk. Vistra Energy Corp is currently generating about 0.16 per unit of volatility. If you would invest  14,807  in Vistra Energy Corp on October 9, 2024 and sell it today you would earn a total of  1,588  from holding Vistra Energy Corp or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.63%
Values	Daily Returns

TRAVELERS INC 405  vs.  Vistra Energy Corp

TRAVELERS INC 405

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVELERS INC 405 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TRAVELERS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vistra Energy Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Energy Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vistra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVELERS and Vistra Energy

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

The idea behind TRAVELERS INC 405 and Vistra Energy Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.