Correlation Between Travelers Companies and Chegg

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Chegg 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 Chegg 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 Chegg Inc, you can compare the effects of market volatilities on Travelers Companies and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Chegg.

Diversification Opportunities for Travelers Companies and Chegg

-0.62

Correlation Coefficient

Travelers Companies  Chegg

Excellent diversification

The 3 months correlation between Travelers and Chegg is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of Travelers Companies i.e., Travelers Companies and Chegg go up and down completely randomly.

Pair Corralation between Travelers Companies and Chegg

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.82 times more return on investment than Chegg. However, The Travelers Companies is 1.22 times less risky than Chegg. It trades about -0.12 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.14 per unit of risk. If you would invest  22,533  in The Travelers Companies on January 26, 2024 and sell it today you would lose (1,190) from holding The Travelers Companies or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Chegg Inc

The Travelers Companies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 1 (%) 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chegg Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chegg Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Travelers Companies and Chegg

The main advantage of trading using opposite Travelers Companies and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Chegg 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 Chegg will offset losses from the drop in Chegg's long position.

The idea behind The Travelers Companies and Chegg Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.