Correlation Between Travelers Companies and Farfetch

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Farfetch 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 Farfetch 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 Farfetch Ltd Cl, you can compare the effects of market volatilities on Travelers Companies and Farfetch 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 Farfetch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Farfetch.

Diversification Opportunities for Travelers Companies and Farfetch

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Travelers and Farfetch is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Farfetch Ltd Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Ltd Cl 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 Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Ltd Cl has no effect on the direction of Travelers Companies i.e., Travelers Companies and Farfetch go up and down completely randomly.

Pair Corralation between Travelers Companies and Farfetch

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.22 times more return on investment than Farfetch. However, The Travelers Companies is 4.56 times less risky than Farfetch. It trades about 0.02 of its potential returns per unit of risk. Farfetch Ltd Cl is currently generating about -0.07 per unit of risk. If you would invest  14,969  in The Travelers Companies on May 9, 2022 and sell it today you would earn a total of  927.00  from holding The Travelers Companies or generate 6.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Farfetch Ltd Cl

 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 weak 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

Farfetch Ltd Cl 
Farfetch Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Farfetch Ltd Cl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Farfetch reported solid returns over the last few months and may actually be approaching a breakup point.

Farfetch Price Channel

Travelers Companies and Farfetch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Farfetch

The main advantage of trading using opposite Travelers Companies and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Farfetch 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 Farfetch will offset losses from the drop in Farfetch's long position.
The idea behind The Travelers Companies and Farfetch Ltd Cl 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go