Correlation Between Federal Life and UTG
Can any of the company-specific risk be diversified away by investing in both Federal Life and UTG 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 Federal Life and UTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Life Group and UTG Inc, you can compare the effects of market volatilities on Federal Life and UTG 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 Federal Life with a short position of UTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Life and UTG.
Diversification Opportunities for Federal Life and UTG
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and UTG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federal Life Group and UTG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTG Inc and Federal Life 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 Federal Life Group are associated (or correlated) with UTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTG Inc has no effect on the direction of Federal Life i.e., Federal Life and UTG go up and down completely randomly.
Pair Corralation between Federal Life and UTG
If you would invest 2,960 in UTG Inc on August 31, 2024 and sell it today you would earn a total of 0.00 from holding UTG Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Life Group vs. UTG Inc
Performance |
| Timeline |
| Federal Life Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| UTG Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal Life and UTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Life and UTG
The main advantage of trading using opposite Federal Life and UTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Life position performs unexpectedly, UTG 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 UTG will offset losses from the drop in UTG's long position.The idea behind Federal Life Group and UTG Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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