Correlation Between Travelers Companies and ST Energy
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and ST Energy 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 ST Energy 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 ST Energy Transition, you can compare the effects of market volatilities on Travelers Companies and ST Energy 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 ST Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and ST Energy.
Diversification Opportunities for Travelers Companies and ST Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and STET is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and ST Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Energy Transition 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 ST Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Energy Transition has no effect on the direction of Travelers Companies i.e., Travelers Companies and ST Energy go up and down completely randomly.
Pair Corralation between Travelers Companies and ST Energy
Considering the 90-day investment horizon The Travelers Companies is expected to generate 13.41 times more return on investment than ST Energy. However, Travelers Companies is 13.41 times more volatile than ST Energy Transition. It trades about 0.06 of its potential returns per unit of risk. ST Energy Transition is currently generating about 0.25 per unit of risk. If you would invest 18,034 in The Travelers Companies on September 3, 2024 and sell it today you would earn a total of 8,317 from holding The Travelers Companies or generate 46.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 24.65% |
| Values | Daily Returns |
The Travelers Companies vs. ST Energy Transition
Performance |
| Timeline |
| The Travelers Companies |
| ST Energy Transition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and ST Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and ST Energy
The main advantage of trading using opposite Travelers Companies and ST Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, ST Energy 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 ST Energy will offset losses from the drop in ST Energy's long position.| Travelers Companies vs. SPACE | Travelers Companies vs. Ampleforth | Travelers Companies vs. ionet | Travelers Companies vs. KIN |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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