Correlation Between Kemper and Travelers Companies

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

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

Diversification Opportunities for Kemper and Travelers Companies

0.51

Correlation Coefficient

Kemper  Travelers Companies

Very weak diversification

The 3 months correlation between Kemper and Travelers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kemper 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 Kemper 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 Kemper 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 Kemper i.e., Kemper and Travelers Companies go up and down completely randomly.

Pair Corralation between Kemper and Travelers Companies

Given the investment horizon of 90 days Kemper is expected to under-perform the Travelers Companies. In addition to that, Kemper is 1.27 times more volatile than The Travelers Companies. It trades about -0.06 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.06 per unit of volatility. If you would invest  23,238  in The Travelers Companies on January 13, 2025 and sell it today you would earn a total of  1,275  from holding The Travelers Companies or generate 5.49% return on investment over 90 days.

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

Kemper  vs.  The Travelers Companies

Kemper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kemper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 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.

Pair Trading with Kemper and Travelers Companies

The main advantage of trading using opposite Kemper and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper 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 Kemper 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.