Correlation Between New Oriental and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and The Travelers Companies, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Travelers Companies.
Diversification Opportunities for New Oriental and Travelers Companies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Travelers is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education 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 New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Travelers Companies go up and down completely randomly.
Pair Corralation between New Oriental and Travelers Companies
Assuming the 90 days trading horizon New Oriental Education is expected to generate 1.23 times more return on investment than Travelers Companies. However, New Oriental is 1.23 times more volatile than The Travelers Companies. It trades about 0.05 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.05 per unit of risk. If you would invest 82,260 in New Oriental Education on October 16, 2024 and sell it today you would earn a total of 43,074 from holding New Oriental Education or generate 52.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. The Travelers Companies
Performance |
| Timeline |
| New Oriental Education |
| The Travelers Companies |
New Oriental and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Travelers Companies
The main advantage of trading using opposite New Oriental and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. McEwen Mining | New Oriental vs. Hoteles City Express | New Oriental vs. FibraHotel | New Oriental vs. Grupo Sports World |
| Travelers Companies vs. Verizon Communications | Travelers Companies vs. DXC Technology | Travelers Companies vs. UnitedHealth Group Incorporated | Travelers Companies vs. New Oriental Education |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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