Correlation Between FG Annuities and Direct Line
Can any of the company-specific risk be diversified away by investing in both FG Annuities and Direct Line 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 FG Annuities and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FG Annuities Life and Direct Line Insurance, you can compare the effects of market volatilities on FG Annuities and Direct Line 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 FG Annuities with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Annuities and Direct Line.
Diversification Opportunities for FG Annuities and Direct Line
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FG Annuities and Direct is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and FG Annuities 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 FG Annuities Life are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of FG Annuities i.e., FG Annuities and Direct Line go up and down completely randomly.
Pair Corralation between FG Annuities and Direct Line
Allowing for the 90-day total investment horizon FG Annuities Life is expected to generate 1.37 times more return on investment than Direct Line. However, FG Annuities is 1.37 times more volatile than Direct Line Insurance. It trades about 0.24 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.29 per unit of risk. If you would invest 4,113 in FG Annuities Life on November 3, 2024 and sell it today you would earn a total of 478.00 from holding FG Annuities Life or generate 11.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FG Annuities Life vs. Direct Line Insurance
Performance |
| Timeline |
| FG Annuities Life |
| Direct Line Insurance |
FG Annuities and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FG Annuities and Direct Line
The main advantage of trading using opposite FG Annuities and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Annuities position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| FG Annuities vs. Prudential Financial | FG Annuities vs. Lincoln National | FG Annuities vs. Aflac Incorporated | FG Annuities vs. Unum Group |
| Direct Line vs. Marchex | Direct Line vs. ZhongAn Online P | Direct Line vs. Antero Midstream Partners | Direct Line vs. Cimpress NV |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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