Correlation Between Travelers Companies and Alpha Bank

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

Diversification Opportunities for Travelers Companies and Alpha Bank

-0.54

Correlation Coefficient

Travelers Companies  Alpha Bank

Excellent diversification

The 3 months correlation between Travelers and Alpha is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA 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 Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of Travelers Companies i.e., Travelers Companies and Alpha Bank go up and down completely randomly.

Pair Corralation between Travelers Companies and Alpha Bank

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Alpha Bank. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 2.71 times less risky than Alpha Bank. The stock trades about -0.15 of its potential returns per unit of risk. The Alpha Bank SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Alpha Bank SA on September 12, 2024 and sell it today you would lose (1.00) from holding Alpha Bank SA or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Alpha Bank SA

The Travelers Companies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Travelers Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alpha Bank SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Bank SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Alpha Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and Alpha Bank

The main advantage of trading using opposite Travelers Companies and Alpha Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Alpha Bank 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 Alpha Bank will offset losses from the drop in Alpha Bank's long position.

The idea behind The Travelers Companies and Alpha Bank SA 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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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 the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.