Correlation Between EFU General and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both EFU General and Jubilee 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 EFU General and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFU General Insurance and Jubilee Life Insurance, you can compare the effects of market volatilities on EFU General and Jubilee 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 EFU General with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Jubilee Life.
Diversification Opportunities for EFU General and Jubilee Life
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EFU and Jubilee is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and EFU General 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 EFU General Insurance are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of EFU General i.e., EFU General and Jubilee Life go up and down completely randomly.
Pair Corralation between EFU General and Jubilee Life
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 1.93 times more return on investment than Jubilee Life. However, EFU General is 1.93 times more volatile than Jubilee Life Insurance. It trades about 0.37 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about 0.11 per unit of risk. If you would invest 8,855 in EFU General Insurance on August 27, 2024 and sell it today you would earn a total of 3,645 from holding EFU General Insurance or generate 41.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFU General Insurance vs. Jubilee Life Insurance
Performance |
| Timeline |
| EFU General Insurance |
| Jubilee Life Insurance |
EFU General and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Jubilee Life
The main advantage of trading using opposite EFU General and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Jubilee 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 Jubilee Life will offset losses from the drop in Jubilee Life's long position.| EFU General vs. Pakistan Aluminium Beverage | EFU General vs. Murree Brewery | EFU General vs. Sitara Chemical Industries | EFU General vs. Avanceon |
| Jubilee Life vs. Ghandhara Automobile | Jubilee Life vs. Unilever Pakistan Foods | Jubilee Life vs. Adamjee Insurance | Jubilee Life vs. Atlas Insurance |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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