Correlation Between Travelers Companies and Axcella Health
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Axcella Health 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 Companies and Axcella Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Axcella Health, you can compare the effects of market volatilities on Travelers Companies and Axcella Health 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 Companies with a short position of Axcella Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Axcella Health.
Diversification Opportunities for Travelers Companies and Axcella Health
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Travelers and Axcella is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Axcella Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcella Health and Travelers Companies 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 The Travelers Companies are associated (or correlated) with Axcella Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcella Health has no effect on the direction of Travelers Companies i.e., Travelers Companies and Axcella Health go up and down completely randomly.
Pair Corralation between Travelers Companies and Axcella Health
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.07 times less return on investment than Axcella Health. But when comparing it to its historical volatility, The Travelers Companies is 11.88 times less risky than Axcella Health. It trades about 0.06 of its potential returns per unit of risk. Axcella Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Axcella Health on August 25, 2024 and sell it today you would lose (70.00) from holding Axcella Health or give up 77.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.99% |
| Values | Daily Returns |
The Travelers Companies vs. Axcella Health
Performance |
| Timeline |
| The Travelers Companies |
| Axcella Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and Axcella Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Axcella Health
The main advantage of trading using opposite Travelers Companies and Axcella Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Axcella Health 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 Axcella Health will offset losses from the drop in Axcella Health's long position.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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