Correlation Between Travelers Companies and Sintana Energy

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

Diversification Opportunities for Travelers Companies and Sintana Energy

-0.56

Correlation Coefficient

Travelers Companies  Sintana Energy

Excellent diversification

The 3 months correlation between Travelers and Sintana is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy 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 Sintana Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sintana Energy has no effect on the direction of Travelers Companies i.e., Travelers Companies and Sintana Energy go up and down completely randomly.

Pair Corralation between Travelers Companies and Sintana Energy

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Sintana Energy. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 5.2 times less risky than Sintana Energy. The stock trades about -0.29 of its potential returns per unit of risk. The Sintana Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Sintana Energy on September 18, 2024 and sell it today you would earn a total of  15.00  from holding Sintana Energy or generate 22.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

The Travelers Companies  vs.  Sintana Energy

The Travelers Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sintana Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sintana Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sintana Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Sintana Energy

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

The idea behind The Travelers Companies and Sintana Energy 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.