Correlation Between Travelers Companies and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and NSTAR Electric 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 NSTAR Electric 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 NSTAR Electric, you can compare the effects of market volatilities on Travelers Companies and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and NSTAR Electric.
Diversification Opportunities for Travelers Companies and NSTAR Electric
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Travelers and NSTAR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Travelers Companies i.e., Travelers Companies and NSTAR Electric go up and down completely randomly.
Pair Corralation between Travelers Companies and NSTAR Electric
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.43 times more return on investment than NSTAR Electric. However, Travelers Companies is 1.43 times more volatile than NSTAR Electric. It trades about 0.06 of its potential returns per unit of risk. NSTAR Electric is currently generating about -0.04 per unit of risk. If you would invest 22,613 in The Travelers Companies on November 28, 2024 and sell it today you would earn a total of 2,411 from holding The Travelers Companies or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 40.16% |
| Values | Daily Returns |
The Travelers Companies vs. NSTAR Electric
Performance |
| Timeline |
| The Travelers Companies |
| NSTAR Electric |
Travelers Companies and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and NSTAR Electric
The main advantage of trading using opposite Travelers Companies and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley |
| NSTAR Electric vs. Life Time Group | NSTAR Electric vs. Arcos Dorados Holdings | NSTAR Electric vs. Alto Ingredients | NSTAR Electric vs. Griffon |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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