Correlation Between Fastly and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Fastly 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 Fastly and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastly Inc and The Travelers Companies, you can compare the effects of market volatilities on Fastly 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 Fastly with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and Travelers Companies.
Diversification Opportunities for Fastly and Travelers Companies
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fastly and Travelers is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fastly 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 Fastly 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 Fastly 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 Fastly i.e., Fastly and Travelers Companies go up and down completely randomly.
Pair Corralation between Fastly and Travelers Companies
Given the investment horizon of 90 days Fastly Inc is expected to under-perform the Travelers Companies. In addition to that, Fastly is 3.35 times more volatile than The Travelers Companies. It trades about 0.0 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.08 per unit of volatility. If you would invest 17,695 in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of 8,682 from holding The Travelers Companies or generate 49.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fastly Inc vs. The Travelers Companies
Performance |
| Timeline |
| Fastly Inc |
| The Travelers Companies |
Fastly and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastly and Travelers Companies
The main advantage of trading using opposite Fastly and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly 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 Fastly 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.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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