Correlation Between Stepan and TRAVELERS
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By analyzing existing cross correlation between Stepan Company and TRAVELERS INS GROUP, you can compare the effects of market volatilities on Stepan and TRAVELERS 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 Stepan with a short position of TRAVELERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and TRAVELERS.
Diversification Opportunities for Stepan and TRAVELERS
Weak diversification
The 3 months correlation between Stepan and TRAVELERS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and TRAVELERS INS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVELERS INS GROUP and Stepan 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 Stepan Company are associated (or correlated) with TRAVELERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVELERS INS GROUP has no effect on the direction of Stepan i.e., Stepan and TRAVELERS go up and down completely randomly.
Pair Corralation between Stepan and TRAVELERS
Considering the 90-day investment horizon Stepan Company is expected to under-perform the TRAVELERS. In addition to that, Stepan is 2.17 times more volatile than TRAVELERS INS GROUP. It trades about -0.15 of its total potential returns per unit of risk. TRAVELERS INS GROUP is currently generating about 0.11 per unit of volatility. If you would invest 10,427 in TRAVELERS INS GROUP on October 22, 2024 and sell it today you would earn a total of 124.00 from holding TRAVELERS INS GROUP or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.21% |
| Values | Daily Returns |
Stepan Company vs. TRAVELERS INS GROUP
Performance |
| Timeline |
| Stepan Company |
| TRAVELERS INS GROUP |
Stepan and TRAVELERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and TRAVELERS
The main advantage of trading using opposite Stepan and TRAVELERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, TRAVELERS 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 will offset losses from the drop in TRAVELERS's long position.The idea behind Stepan Company and TRAVELERS INS GROUP 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 vs. Codexis | TRAVELERS vs. CVR Partners LP | TRAVELERS vs. Entegris | TRAVELERS vs. ASML Holding NV |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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