Correlation Between ATN International and Travelers Companies

Can any of the company-specific risk be diversified away by investing in both ATN International and Travelers Companies 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 ATN International and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATN International and The Travelers Companies, you can compare the effects of market volatilities on ATN International and Travelers Companies 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 ATN International with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATN International and Travelers Companies.

Diversification Opportunities for ATN International and Travelers Companies

0.74

Correlation Coefficient

ATN International  Travelers Companies

Poor diversification

The 3 months correlation between ATN and Travelers is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and ATN International 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 ATN International are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of ATN International i.e., ATN International and Travelers Companies go up and down completely randomly.

Pair Corralation between ATN International and Travelers Companies

Given the investment horizon of 90 days ATN International is expected to generate 1.65 times more return on investment than Travelers Companies. However, ATN International is 1.65 times more volatile than The Travelers Companies. It trades about 0.07 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.06 per unit of risk. If you would invest  1,552  in ATN International on January 12, 2025 and sell it today you would earn a total of  173.00  from holding ATN International or generate 11.15% return on investment over 90 days.

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

ATN International  vs.  The Travelers Companies

ATN International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATN International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, ATN International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

The Travelers Companies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 4 (%) 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 May 2025.

Pair Trading with ATN International and Travelers Companies

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

The idea behind ATN International and The Travelers Companies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.