Correlation Between Travelers Companies and New Relic
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and New Relic 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 New Relic 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 New Relic, you can compare the effects of market volatilities on Travelers Companies and New Relic 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 New Relic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and New Relic.
Diversification Opportunities for Travelers Companies and New Relic
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travelers and New is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and New Relic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Relic 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 New Relic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Relic has no effect on the direction of Travelers Companies i.e., Travelers Companies and New Relic go up and down completely randomly.
Pair Corralation between Travelers Companies and New Relic
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.23 times less return on investment than New Relic. But when comparing it to its historical volatility, The Travelers Companies is 1.1 times less risky than New Relic. It trades about 0.1 of its potential returns per unit of risk. New Relic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,834 in New Relic on August 31, 2024 and sell it today you would earn a total of 330.00 from holding New Relic or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
The Travelers Companies vs. New Relic
Performance |
| Timeline |
| The Travelers Companies |
| New Relic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and New Relic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and New Relic
The main advantage of trading using opposite Travelers Companies and New Relic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, New Relic 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 New Relic will offset losses from the drop in New Relic's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. CNA Financial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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