Correlation Between 594918AR5 and Travelers Companies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both 594918AR5 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 594918AR5 and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MICROSOFT P 35 and The Travelers Companies, you can compare the effects of market volatilities on 594918AR5 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 594918AR5 with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 594918AR5 and Travelers Companies.

Diversification Opportunities for 594918AR5 and Travelers Companies

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between 594918AR5 and Travelers is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MICROSOFT CORP 3.5% 15Nov2042 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 594918AR5 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 MICROSOFT P 35 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 594918AR5 i.e., 594918AR5 and Travelers Companies go up and down completely randomly.

Pair Corralation between 594918AR5 and Travelers Companies

Assuming the 90 days trading horizon MICROSOFT P 35 is expected to generate 11.98 times more return on investment than Travelers Companies. However, 594918AR5 is 11.98 times more volatile than The Travelers Companies. It trades about 0.22 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.24 per unit of risk. If you would invest  8,366  in MICROSOFT P 35 on December 29, 2023 and sell it today you would earn a total of  3,406  from holding MICROSOFT P 35 or generate 40.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

MICROSOFT CORP 3.5% 15Nov2042  vs.  The Travelers Companies

 Performance 
       Timeline  
MICROSOFT P 35 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MICROSOFT P 35 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 594918AR5 sustained solid returns over the last few months and may actually be approaching a breakup point.
The Travelers Companies 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

594918AR5 and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 594918AR5 and Travelers Companies

The main advantage of trading using opposite 594918AR5 and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 594918AR5 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 MICROSOFT P 35 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.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Commodity Directory
Find actively traded commodities issued by global exchanges
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance