Correlation Between Travelers Companies and Intel

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

Diversification Opportunities for Travelers Companies and Intel

-0.31

Correlation Coefficient

Travelers Companies  Intel

Very good diversification

The 3 months correlation between Travelers and Intel is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Travelers Companies i.e., Travelers Companies and Intel go up and down completely randomly.

Pair Corralation between Travelers Companies and Intel

Considering the 90-day investment horizon Travelers Companies is expected to generate 1.44 times less return on investment than Intel. But when comparing it to its historical volatility, The Travelers Companies is 1.86 times less risky than Intel. It trades about 0.04 of its potential returns per unit of risk. Intel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,930  in Intel on January 24, 2024 and sell it today you would earn a total of  511.00  from holding Intel or generate 17.44% return on investment over 90 days.

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

The Travelers Companies  vs.  Intel

The Travelers Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) 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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Travelers Companies and Intel

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

The idea behind The Travelers Companies and Intel 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.