Correlation Between Travelers Companies and Mogu Inc

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

Diversification Opportunities for Travelers Companies and Mogu Inc

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Travelers and Mogu Inc is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Mogu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mogu Inc ADR 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 Mogu Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mogu Inc ADR has no effect on the direction of Travelers Companies i.e., Travelers Companies and Mogu Inc go up and down completely randomly.

Pair Corralation between Travelers Companies and Mogu Inc

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Mogu Inc. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 4.17 times less risky than Mogu Inc. The stock trades about -0.03 of its potential returns per unit of risk. The Mogu Inc ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  171.00  in Mogu Inc ADR on May 17, 2022 and sell it today you would earn a total of  30.00  from holding Mogu Inc ADR or generate 17.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Mogu Inc ADR

 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 fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Travelers Price Channel

Mogu Inc ADR 
Mogu Inc Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mogu Inc ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Mogu Inc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mogu Inc Price Channel

Travelers Companies and Mogu Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Mogu Inc

The main advantage of trading using opposite Travelers Companies and Mogu Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Mogu Inc 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 Mogu Inc will offset losses from the drop in Mogu Inc's long position.
The idea behind The Travelers Companies and Mogu Inc ADR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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