Correlation Between Capstone Green and Travelers Companies

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

Diversification Opportunities for Capstone Green and Travelers Companies

  Correlation Coefficient

Very weak diversification

The 3 months correlation between Capstone and Travelers is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Green Energy 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 Capstone Green 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 Capstone Green Energy 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 Capstone Green i.e., Capstone Green and Travelers Companies go up and down completely randomly.

Pair Corralation between Capstone Green and Travelers Companies

Given the investment horizon of 90 days Capstone Green Energy is expected to under-perform the Travelers Companies. In addition to that, Capstone Green is 3.85 times more volatile than The Travelers Companies. It trades about -0.04 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.02 per unit of volatility. If you would invest  14,558  in The Travelers Companies on December 24, 2022 and sell it today you would earn a total of  1,828  from holding The Travelers Companies or generate 12.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Capstone Green Energy  vs.  The Travelers Companies

 Performance (%) 
Capstone Green Energy 

Capstone Performance

4 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Green Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Capstone Green displayed solid returns over the last few months and may actually be approaching a breakup point.
The Travelers Companies 

Travelers Performance

0 of 100

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2023. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Capstone Green and Travelers Companies Volatility Contrast

   Predicted Return Density   

Pair Trading with Capstone Green and Travelers Companies

The main advantage of trading using opposite Capstone Green and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Green 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.
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The idea behind Capstone Green Energy 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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