Correlation Between Brighthouse Financial and Globe Life
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Globe Life 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 Globe Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Globe Life 425, you can compare the effects of market volatilities on Brighthouse Financial and Globe Life 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 Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Globe Life.
Diversification Opportunities for Brighthouse Financial and Globe Life
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brighthouse and Globe is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Globe Life 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life 425 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 Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life 425 has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Globe Life go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Globe Life
Assuming the 90 days horizon Brighthouse Financial is expected to under-perform the Globe Life. In addition to that, Brighthouse Financial is 1.91 times more volatile than Globe Life 425. It trades about -0.07 of its total potential returns per unit of risk. Globe Life 425 is currently generating about -0.07 per unit of volatility. If you would invest 1,655 in Globe Life 425 on November 28, 2024 and sell it today you would lose (21.00) from holding Globe Life 425 or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Globe Life 425
Performance |
| Timeline |
| Brighthouse Financial |
| Globe Life 425 |
Brighthouse Financial and Globe Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Globe Life
The main advantage of trading using opposite Brighthouse Financial and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Globe Life 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 Globe Life will offset losses from the drop in Globe Life's long position.| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Fifth Third Bancorp | Brighthouse Financial vs. First Citizens BancShares |
| Globe Life vs. Southern Company Series | Globe Life vs. KKRS | Globe Life vs. Prudential Financial 4125 | Globe Life vs. United States Cellular |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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