Correlation Between Globe Life and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Globe Life and Brighthouse 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 Globe Life and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Life 425 and Brighthouse Financial, you can compare the effects of market volatilities on Globe Life and Brighthouse 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 Globe Life with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and Brighthouse Financial.
Diversification Opportunities for Globe Life and Brighthouse Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globe and Brighthouse is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 425 and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and Globe 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 Globe Life 425 are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Globe Life i.e., Globe Life and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Globe Life and Brighthouse Financial
Assuming the 90 days horizon Globe Life 425 is expected to generate 1.43 times more return on investment than Brighthouse Financial. However, Globe Life is 1.43 times more volatile than Brighthouse Financial. It trades about -0.17 of its potential returns per unit of risk. Brighthouse Financial is currently generating about -0.29 per unit of risk. If you would invest 1,822 in Globe Life 425 on August 30, 2024 and sell it today you would lose (92.00) from holding Globe Life 425 or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Life 425 vs. Brighthouse Financial
Performance |
| Timeline |
| Globe Life 425 |
| Brighthouse Financial |
Globe Life and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Life and Brighthouse Financial
The main advantage of trading using opposite Globe Life and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life position performs unexpectedly, Brighthouse 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| Globe Life vs. Brighthouse Financial | Globe Life vs. Brighthouse Financial | Globe Life vs. MetLife Preferred Stock | Globe Life vs. Brighthouse Financial |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. First Citizens BancShares |
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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