Correlation Between Travelers Companies and XL Fleet

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

Diversification Opportunities for Travelers Companies and XL Fleet

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Travelers and XL Fleet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and XL Fleet Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Fleet Corp 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 XL Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Fleet Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and XL Fleet go up and down completely randomly.

Pair Corralation between Travelers Companies and XL Fleet

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.28 times more return on investment than XL Fleet. However, The Travelers Companies is 3.54 times less risky than XL Fleet. It trades about -0.23 of its potential returns per unit of risk. XL Fleet Corp is currently generating about -0.19 per unit of risk. If you would invest  16,330  in The Travelers Companies on July 3, 2022 and sell it today you would lose (1,010)  from holding The Travelers Companies or give up 6.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  XL Fleet Corp

 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 conflicting 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

XL Fleet Corp 
XL Fleet Performance
0 of 100
Over the last 90 days XL Fleet Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's essential indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

XL Fleet Price Channel

Travelers Companies and XL Fleet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and XL Fleet

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

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