Correlation Between Travelers Companies and One Choice

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

Diversification Opportunities for Travelers Companies and One Choice

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Travelers and AAAHX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and One Choice Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice Blend 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice Blend has no effect on the direction of Travelers Companies i.e., Travelers Companies and One Choice go up and down completely randomly.

Pair Corralation between Travelers Companies and One Choice

Considering the 90-day investment horizon The Travelers Companies is expected to generate 2.72 times more return on investment than One Choice. However, Travelers Companies is 2.72 times more volatile than One Choice Blend. It trades about 0.03 of its potential returns per unit of risk. One Choice Blend is currently generating about -0.07 per unit of risk. If you would invest  13,250  in The Travelers Companies on July 3, 2022 and sell it today you would earn a total of  2,070  from holding The Travelers Companies or generate 15.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy82.81%
ValuesDaily Returns

The Travelers Companies  vs.  One Choice Blend

 Performance (%) 
       Timeline  
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 latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Travelers Price Channel

One Choice Blend 
AAAHX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, One Choice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AAAHX Price Channel

Travelers Companies and One Choice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and One Choice

The main advantage of trading using opposite Travelers Companies and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.
Travelers Companies vs. Amazon Inc
The idea behind The Travelers Companies and One Choice Blend 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.
One Choice vs. Bank Of America
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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