Correlation Between Travelers Companies and Azure Power
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Azure Power 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 Azure Power 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 Azure Power Global, you can compare the effects of market volatilities on Travelers Companies and Azure Power 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 Azure Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Azure Power.
Diversification Opportunities for Travelers Companies and Azure Power
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Travelers and Azure is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Azure Power Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Power Global 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 Azure Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Power Global has no effect on the direction of Travelers Companies i.e., Travelers Companies and Azure Power go up and down completely randomly.
Pair Corralation between Travelers Companies and Azure Power
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.16 times more return on investment than Azure Power. However, The Travelers Companies is 6.29 times less risky than Azure Power. It trades about 0.06 of its potential returns per unit of risk. Azure Power Global is currently generating about -0.13 per unit of risk. If you would invest 17,624 in The Travelers Companies on September 6, 2024 and sell it today you would earn a total of 8,554 from holding The Travelers Companies or generate 48.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 29.09% |
Values | Daily Returns |
The Travelers Companies vs. Azure Power Global
Performance |
Timeline |
The Travelers Companies |
Azure Power Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Travelers Companies and Azure Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and Azure Power
The main advantage of trading using opposite Travelers Companies and Azure Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Azure Power 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 Azure Power will offset losses from the drop in Azure Power's long position.Travelers Companies vs. Progressive Corp | Travelers Companies vs. W R Berkley | Travelers Companies vs. Markel | Travelers Companies vs. W R Berkley |
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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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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