Correlation Between Brighthouse Financial and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Aflac Incorporated 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 Brighthouse Financial and Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Aflac Incorporated, you can compare the effects of market volatilities on Brighthouse Financial and Aflac Incorporated 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 Brighthouse Financial with a short position of Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Aflac Incorporated.
Diversification Opportunities for Brighthouse Financial and Aflac Incorporated
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brighthouse and Aflac is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Aflac Incorporated go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Aflac Incorporated
Considering the 90-day investment horizon Brighthouse Financial is expected to generate 2.1 times more return on investment than Aflac Incorporated. However, Brighthouse Financial is 2.1 times more volatile than Aflac Incorporated. It trades about 0.14 of its potential returns per unit of risk. Aflac Incorporated is currently generating about 0.12 per unit of risk. If you would invest 4,878 in Brighthouse Financial on August 28, 2024 and sell it today you would earn a total of 404.00 from holding Brighthouse Financial or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Aflac Incorporated
Performance |
| Timeline |
| Brighthouse Financial |
| Aflac Incorporated |
Brighthouse Financial and Aflac Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Aflac Incorporated
The main advantage of trading using opposite Brighthouse Financial and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.| Brighthouse Financial vs. Prudential Financial | Brighthouse Financial vs. Lincoln National | Brighthouse Financial vs. Aflac Incorporated | Brighthouse Financial vs. Unum Group |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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