Correlation Between Interpublic and Travelers Companies

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

Diversification Opportunities for Interpublic and Travelers Companies

-0.46
  Correlation Coefficient

Very good diversification

The 1 month correlation between Interpublic and Travelers is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group Of 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 Interpublic 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 Interpublic Group 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 Interpublic i.e., Interpublic and Travelers Companies go up and down completely randomly.

Pair Corralation between Interpublic and Travelers Companies

Considering the 90-day investment horizon Interpublic Group is expected to generate 1.42 times more return on investment than Travelers Companies. However, Interpublic is 1.42 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  1,700  in Interpublic Group on May 11, 2022 and sell it today you would earn a total of  1,195  from holding Interpublic Group or generate 70.29% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Interpublic Group Of  vs.  The Travelers Companies

 Performance (%) 
       Timeline  
Interpublic Group 
Interpublic Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Interpublic Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Interpublic may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Interpublic Price Channel

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Travelers Price Channel

Interpublic and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Interpublic and Travelers Companies

The main advantage of trading using opposite Interpublic and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic 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 Interpublic Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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