Correlation Between Abacus Life and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Abacus Life and Brighthouse Financial 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 Abacus Life and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abacus Life and Brighthouse Financial, you can compare the effects of market volatilities on Abacus Life and Brighthouse Financial 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 Abacus Life with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life and Brighthouse Financial.
Diversification Opportunities for Abacus Life and Brighthouse Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Abacus and Brighthouse is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and Abacus Life 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 Abacus Life are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Abacus Life i.e., Abacus Life and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Abacus Life and Brighthouse Financial
Assuming the 90 days horizon Abacus Life is expected to under-perform the Brighthouse Financial. In addition to that, Abacus Life is 6.68 times more volatile than Brighthouse Financial. It trades about -0.1 of its total potential returns per unit of risk. Brighthouse Financial is currently generating about -0.29 per unit of volatility. If you would invest 2,068 in Brighthouse Financial on August 30, 2024 and sell it today you would lose (123.00) from holding Brighthouse Financial or give up 5.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abacus Life vs. Brighthouse Financial
Performance |
| Timeline |
| Abacus Life |
| Brighthouse Financial |
Abacus Life and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abacus Life and Brighthouse Financial
The main advantage of trading using opposite Abacus Life and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abacus Life position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| Abacus Life vs. Citigroup | Abacus Life vs. Loews Corp | Abacus Life vs. Visa Class A | Abacus Life vs. Diamond Hill Investment |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. First Citizens BancShares |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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