Correlation Between 058498AW6 and Travelers Companies

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Can any of the company-specific risk be diversified away by investing in both 058498AW6 and Travelers Companies 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 058498AW6 and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BALL P 2875 and The Travelers Companies, you can compare the effects of market volatilities on 058498AW6 and Travelers Companies 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 058498AW6 with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 058498AW6 and Travelers Companies.

Diversification Opportunities for 058498AW6 and Travelers Companies

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between 058498AW6 and Travelers is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BALL P 2875 and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and 058498AW6 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 BALL P 2875 are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of 058498AW6 i.e., 058498AW6 and Travelers Companies go up and down completely randomly.

Pair Corralation between 058498AW6 and Travelers Companies

Assuming the 90 days trading horizon BALL P 2875 is expected to under-perform the Travelers Companies. In addition to that, 058498AW6 is 1.3 times more volatile than The Travelers Companies. It trades about -0.28 of its total potential returns per unit of risk. The Travelers Companies is currently generating about -0.18 per unit of volatility. If you would invest  25,728  in The Travelers Companies on September 12, 2024 and sell it today you would lose (1,214) from holding The Travelers Companies or give up 4.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BALL P 2875  vs.  The Travelers Companies

 Performance 
       Timeline  
BALL P 2875 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BALL P 2875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BALL P 2875 investors.
The Travelers Companies 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

058498AW6 and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 058498AW6 and Travelers Companies

The main advantage of trading using opposite 058498AW6 and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 058498AW6 position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.
The idea behind BALL P 2875 and The Travelers Companies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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