Correlation Between Travelers Companies and Albertsons Companies

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

Diversification Opportunities for Travelers Companies and Albertsons Companies

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Travelers and Albertsons is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies 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 Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Travelers Companies i.e., Travelers Companies and Albertsons Companies go up and down completely randomly.

Pair Corralation between Travelers Companies and Albertsons Companies

Considering the 90-day investment horizon Travelers Companies is expected to generate 1.67 times less return on investment than Albertsons Companies. In addition to that, Travelers Companies is 1.14 times more volatile than Albertsons Companies. It trades about 0.2 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.38 per unit of volatility. If you would invest  2,033  in Albertsons Companies on September 10, 2022 and sell it today you would earn a total of  124.00  from holding Albertsons Companies or generate 6.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Albertsons Companies

 Performance (%) 
       Timeline  
The Travelers Companies 
Travelers Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent 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 
Albertsons Performance
0 of 100
Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Albertsons Price Channel

Travelers Companies and Albertsons Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Albertsons Companies

The main advantage of trading using opposite Travelers Companies and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Albertsons 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.
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The idea behind The Travelers Companies and Albertsons 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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