Correlation Between Travelers Companies and Exxon

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

Diversification Opportunities for Travelers Companies and Exxon

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Travelers and Exxon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Exxon go up and down completely randomly.

Pair Corralation between Travelers Companies and Exxon

Considering the 90-day investment horizon Travelers Companies is expected to generate 3.13 times less return on investment than Exxon. But when comparing it to its historical volatility, The Travelers Companies is 1.49 times less risky than Exxon. It trades about 0.05 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,161  in Exxon Mobil Corp on July 1, 2022 and sell it today you would earn a total of  5,631  from holding Exxon Mobil Corp or generate 178.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Exxon Mobil 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

Exxon Mobil Corp 
Exxon Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon Price Channel

Travelers Companies and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Exxon

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

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