Correlation Between SOUTHWEST and Travelers Companies
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By analyzing existing cross correlation between SOUTHWEST AIRLS 3 and The Travelers Companies, you can compare the effects of market volatilities on SOUTHWEST 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 SOUTHWEST with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST and Travelers Companies.
Diversification Opportunities for SOUTHWEST and Travelers Companies
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SOUTHWEST and Travelers is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLS 3 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 SOUTHWEST 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 SOUTHWEST AIRLS 3 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 SOUTHWEST i.e., SOUTHWEST and Travelers Companies go up and down completely randomly.
Pair Corralation between SOUTHWEST and Travelers Companies
Assuming the 90 days trading horizon SOUTHWEST AIRLS 3 is expected to under-perform the Travelers Companies. But the bond apears to be less risky and, when comparing its historical volatility, SOUTHWEST AIRLS 3 is 3.35 times less risky than Travelers Companies. The bond trades about -0.07 of its potential returns per unit of risk. The The Travelers Companies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 23,041 in The Travelers Companies on September 4, 2024 and sell it today you would earn a total of 3,018 from holding The Travelers Companies or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.06% |
| Values | Daily Returns |
SOUTHWEST AIRLS 3 vs. The Travelers Companies
Performance |
| Timeline |
| SOUTHWEST AIRLS 3 |
| The Travelers Companies |
SOUTHWEST and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST and Travelers Companies
The main advantage of trading using opposite SOUTHWEST and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST 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.| SOUTHWEST vs. The Travelers Companies | SOUTHWEST vs. GE Aerospace | SOUTHWEST vs. Walmart | SOUTHWEST vs. Pfizer Inc |
| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Cincinnati Financial | Travelers Companies vs. W R Berkley | Travelers Companies vs. The Allstate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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