Correlation Between Travelers Companies and Mojo Organics

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

Diversification Opportunities for Travelers Companies and Mojo Organics

-0.02

Correlation Coefficient

Travelers Companies  Mojo Organics

Good diversification

The 3 months correlation between Travelers and Mojo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Mojo Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mojo Organics 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 Mojo Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mojo Organics has no effect on the direction of Travelers Companies i.e., Travelers Companies and Mojo Organics go up and down completely randomly.

Pair Corralation between Travelers Companies and Mojo Organics

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.38 times more return on investment than Mojo Organics. However, The Travelers Companies is 2.65 times less risky than Mojo Organics. It trades about -0.15 of its potential returns per unit of risk. Mojo Organics is currently generating about -0.3 per unit of risk. If you would invest  22,785  in The Travelers Companies on February 2, 2024 and sell it today you would lose (1,470) from holding The Travelers Companies or give up 6.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

The Travelers Companies  vs.  Mojo Organics

The Travelers Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mojo Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mojo Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Travelers Companies and Mojo Organics

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

The idea behind The Travelers Companies and Mojo Organics 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.