Correlation Between Travelers Companies and Cromwell Property

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

Diversification Opportunities for Travelers Companies and Cromwell Property

0.62

Correlation Coefficient

Travelers Companies  Cromwell Property

Poor diversification

The 3 months correlation between Travelers and Cromwell is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property 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 Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of Travelers Companies i.e., Travelers Companies and Cromwell Property go up and down completely randomly.

Pair Corralation between Travelers Companies and Cromwell Property

Considering the 90-day investment horizon The Travelers Companies is expected to generate 3.73 times more return on investment than Cromwell Property. However, Travelers Companies is 3.73 times more volatile than Cromwell Property Group. It trades about 0.15 of its potential returns per unit of risk. Cromwell Property Group is currently generating about 0.13 per unit of risk. If you would invest  22,688  in The Travelers Companies on September 1, 2024 and sell it today you would earn a total of  3,916  from holding The Travelers Companies or generate 17.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Cromwell Property Group

The Travelers Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Cromwell Property

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cromwell Property Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cromwell Property is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Travelers Companies and Cromwell Property

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

The idea behind The Travelers Companies and Cromwell Property Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.