Correlation Between AFLAC and SPDR SP
Can any of the company-specific risk be diversified away by investing in both AFLAC and SPDR SP 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 AFLAC and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFLAC Inc and SPDR SP Materials, you can compare the effects of market volatilities on AFLAC and SPDR SP 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 AFLAC with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFLAC and SPDR SP.
Diversification Opportunities for AFLAC and SPDR SP
Very weak diversification
The 3 months correlation between AFLAC and SPDR is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AFLAC Inc and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials and AFLAC 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 AFLAC Inc are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Materials has no effect on the direction of AFLAC i.e., AFLAC and SPDR SP go up and down completely randomly.
Pair Corralation between AFLAC and SPDR SP
Assuming the 90 days trading horizon AFLAC Inc is expected to under-perform the SPDR SP. In addition to that, AFLAC is 1.81 times more volatile than SPDR SP Materials. It trades about -0.16 of its total potential returns per unit of risk. SPDR SP Materials is currently generating about -0.15 per unit of volatility. If you would invest 4,519 in SPDR SP Materials on September 13, 2024 and sell it today you would lose (117.00) from holding SPDR SP Materials or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFLAC Inc vs. SPDR SP Materials
Performance |
| Timeline |
| AFLAC Inc |
| SPDR SP Materials |
AFLAC and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFLAC and SPDR SP
The main advantage of trading using opposite AFLAC and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFLAC position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| AFLAC vs. Liberty Media Corp | AFLAC vs. Check Point Software | AFLAC vs. MediaZest plc | AFLAC vs. Centaur Media |
| SPDR SP vs. Vanguard FTSE Developed | SPDR SP vs. Leverage Shares 2x | SPDR SP vs. Amundi Index Solutions | SPDR SP vs. Amundi Index Solutions |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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