Correlation Between Travelers Companies and Celtic Plc

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Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Celtic Plc 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 Celtic Plc 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 Celtic plc, you can compare the effects of market volatilities on Travelers Companies and Celtic Plc 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 Celtic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Celtic Plc.

Diversification Opportunities for Travelers Companies and Celtic Plc

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Travelers and Celtic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc 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 Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of Travelers Companies i.e., Travelers Companies and Celtic Plc go up and down completely randomly.

Pair Corralation between Travelers Companies and Celtic Plc

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.36 times more return on investment than Celtic Plc. However, The Travelers Companies is 2.77 times less risky than Celtic Plc. It trades about 0.27 of its potential returns per unit of risk. Celtic plc is currently generating about 0.04 per unit of risk. If you would invest  24,867  in The Travelers Companies on August 30, 2024 and sell it today you would earn a total of  1,799  from holding The Travelers Companies or generate 7.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Celtic plc

 Performance 
       Timeline  
The Travelers Companies 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.
Celtic plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Celtic plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Travelers Companies and Celtic Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Celtic Plc

The main advantage of trading using opposite Travelers Companies and Celtic Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Celtic Plc 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 Celtic Plc will offset losses from the drop in Celtic Plc's long position.
The idea behind The Travelers Companies and Celtic plc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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