Correlation Between FG Annuities and American Financial
Can any of the company-specific risk be diversified away by investing in both FG Annuities and American 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 FG Annuities and American Financial 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 American Financial Group, you can compare the effects of market volatilities on FG Annuities and American 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 FG Annuities with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Annuities and American Financial.
Diversification Opportunities for FG Annuities and American Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FGN and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial 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 American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of FG Annuities i.e., FG Annuities and American Financial go up and down completely randomly.
Pair Corralation between FG Annuities and American Financial
Considering the 90-day investment horizon FG Annuities is expected to generate 1.11 times less return on investment than American Financial. But when comparing it to its historical volatility, FG Annuities Life is 1.95 times less risky than American Financial. It trades about 0.02 of its potential returns per unit of risk. American Financial Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,435 in American Financial Group on September 1, 2024 and sell it today you would earn a total of 4.00 from holding American Financial Group or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FG Annuities Life vs. American Financial Group
Performance |
| Timeline |
| FG Annuities Life |
| American Financial |
FG Annuities and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FG Annuities and American Financial
The main advantage of trading using opposite FG Annuities and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Annuities position performs unexpectedly, American 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 American Financial will offset losses from the drop in American Financial's long position.| FG Annuities vs. Aehr Test Systems | FG Annuities vs. Lion One Metals | FG Annuities vs. NioCorp Developments Ltd | FG Annuities vs. East Africa Metals |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Aegon Funding |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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