Correlation Between Travelers Companies and SEMPRA

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Can any of the company-specific risk be diversified away by investing in both Travelers Companies and SEMPRA 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 SEMPRA 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 SEMPRA ENERGY 325, you can compare the effects of market volatilities on Travelers Companies and SEMPRA 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 SEMPRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and SEMPRA.

Diversification Opportunities for Travelers Companies and SEMPRA

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Travelers and SEMPRA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and SEMPRA ENERGY 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEMPRA ENERGY 325 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 SEMPRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEMPRA ENERGY 325 has no effect on the direction of Travelers Companies i.e., Travelers Companies and SEMPRA go up and down completely randomly.

Pair Corralation between Travelers Companies and SEMPRA

Considering the 90-day investment horizon The Travelers Companies is expected to generate 3.13 times more return on investment than SEMPRA. However, Travelers Companies is 3.13 times more volatile than SEMPRA ENERGY 325. It trades about 0.06 of its potential returns per unit of risk. SEMPRA ENERGY 325 is currently generating about -0.16 per unit of risk. If you would invest  23,313  in The Travelers Companies on September 12, 2024 and sell it today you would earn a total of  1,452  from holding The Travelers Companies or generate 6.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.89%
ValuesDaily Returns

The Travelers Companies  vs.  SEMPRA ENERGY 325

 Performance 
       Timeline  
The Travelers Companies 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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.
SEMPRA ENERGY 325 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEMPRA ENERGY 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SEMPRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Travelers Companies and SEMPRA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and SEMPRA

The main advantage of trading using opposite Travelers Companies and SEMPRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, SEMPRA 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 SEMPRA will offset losses from the drop in SEMPRA's long position.
The idea behind The Travelers Companies and SEMPRA ENERGY 325 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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