Correlation Between Travelers Companies and Hexo Corp
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Hexo Corp 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 Hexo Corp 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 Hexo Corp, you can compare the effects of market volatilities on Travelers Companies and Hexo Corp 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 Hexo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Hexo Corp.
Diversification Opportunities for Travelers Companies and Hexo Corp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Hexo is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Hexo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexo Corp 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 Hexo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexo Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Hexo Corp go up and down completely randomly.
Pair Corralation between Travelers Companies and Hexo Corp
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.21 times more return on investment than Hexo Corp. However, The Travelers Companies is 4.75 times less risky than Hexo Corp. It trades about 0.06 of its potential returns per unit of risk. Hexo Corp is currently generating about -0.1 per unit of risk. If you would invest 17,960 in The Travelers Companies on August 24, 2024 and sell it today you would earn a total of 8,287 from holding The Travelers Companies or generate 46.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 28.63% |
| Values | Daily Returns |
The Travelers Companies vs. Hexo Corp
Performance |
| Timeline |
| The Travelers Companies |
| Hexo Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and Hexo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Hexo Corp
The main advantage of trading using opposite Travelers Companies and Hexo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Hexo Corp 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 Hexo Corp will offset losses from the drop in Hexo Corp's long position.| Travelers Companies vs. Amtech Systems | Travelers Companies vs. Gold Fields Ltd | Travelers Companies vs. Aegean Airlines SA | Travelers Companies vs. Merck Company |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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