Correlation Between Travelers Companies and Unico American

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

Diversification Opportunities for Travelers Companies and Unico American

-0.68

Correlation Coefficient

Travelers Companies  Unico American

Excellent diversification

The 3 months correlation between Travelers and Unico is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Unico American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unico American 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 Unico American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unico American has no effect on the direction of Travelers Companies i.e., Travelers Companies and Unico American go up and down completely randomly.

Pair Corralation between Travelers Companies and Unico American

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Unico American. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 41.39 times less risky than Unico American. The stock trades about -0.15 of its potential returns per unit of risk. The Unico American is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.33  in Unico American on February 3, 2024 and sell it today you would earn a total of  1.67  from holding Unico American or generate 506.06% return on investment over 90 days.

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

The Travelers Companies  vs.  Unico American

The Travelers Companies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 1 (%) 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.

Unico American

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unico American are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Unico American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelers Companies and Unico American

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

The idea behind The Travelers Companies and Unico American 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 Global Correlations module to find global opportunities by holding instruments from different markets.