Correlation Between Albertsons Companies and Travelers Companies

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

Diversification Opportunities for Albertsons Companies and Travelers Companies

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Albertsons and Travelers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies Inc 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 Albertsons 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 Albertsons Companies 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 Albertsons Companies i.e., Albertsons Companies and Travelers Companies go up and down completely randomly.

Pair Corralation between Albertsons Companies and Travelers Companies

Considering the 90-day investment horizon Albertsons Companies is expected to generate 1.93 times more return on investment than Travelers Companies. However, Albertsons Companies is 1.93 times more volatile than The Travelers Companies. It trades about 0.06 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.06 per unit of risk. If you would invest  1,091  in Albertsons Companies on September 1, 2022 and sell it today you would earn a total of  1,008  from holding Albertsons Companies or generate 92.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Albertsons Companies Inc  vs.  The Travelers Companies

 Performance (%) 
       Timeline  
Albertsons Companies 
Albertsons Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Albertsons Price Channel

The Travelers Companies 
Travelers Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Travelers Price Channel

Albertsons Companies and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Albertsons Companies and Travelers Companies

The main advantage of trading using opposite Albertsons Companies and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies 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 Albertsons Companies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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