Correlation Between Travelers Companies and Goodness Growth

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

Diversification Opportunities for Travelers Companies and Goodness Growth

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Travelers and Goodness is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Travelers Companies i.e., Travelers Companies and Goodness Growth go up and down completely randomly.

Pair Corralation between Travelers Companies and Goodness Growth

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.19 times more return on investment than Goodness Growth. However, The Travelers Companies is 5.37 times less risky than Goodness Growth. It trades about 0.16 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.17 per unit of risk. If you would invest  25,237  in The Travelers Companies on August 29, 2024 and sell it today you would earn a total of  1,140  from holding The Travelers Companies or generate 4.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Goodness Growth Holdings

 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.
Goodness Growth Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Goodness Growth Holdings 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 basic 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 Goodness Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Goodness Growth

The main advantage of trading using opposite Travelers Companies and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Goodness Growth 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 Goodness Growth will offset losses from the drop in Goodness Growth's long position.
The idea behind The Travelers Companies and Goodness Growth Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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