Correlation Between Disney and Travelers Companies

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

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

Diversification Opportunities for Disney and Travelers Companies

-0.41

Correlation Coefficient

Disney  Travelers Companies

Very good diversification

The 3 months correlation between Disney and Travelers is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and Travelers Companies go up and down completely randomly.

Pair Corralation between Disney and Travelers Companies

Considering the 90-day investment horizon Walt Disney is expected to generate 0.91 times more return on investment than Travelers Companies. However, Walt Disney is 1.1 times less risky than Travelers Companies. It trades about 0.22 of its potential returns per unit of risk. The Travelers Companies is currently generating about -0.01 per unit of risk. If you would invest  10,166  in Walt Disney on May 7, 2025 and sell it today you would earn a total of  1,769  from holding Walt Disney or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  The Travelers Companies

Walt Disney

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Travelers Companies

Risk-Adjusted Performance

Weakest

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Disney and Travelers Companies

The main advantage of trading using opposite Disney and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.