Correlation Between Globe Life and Genworth Financial
Can any of the company-specific risk be diversified away by investing in both Globe Life and Genworth 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 Genworth Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Life and Genworth Financial, you can compare the effects of market volatilities on Globe Life and Genworth 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 Genworth Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and Genworth Financial.
Diversification Opportunities for Globe Life and Genworth Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globe and Genworth is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life and Genworth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genworth 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 are associated (or correlated) with Genworth Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genworth Financial has no effect on the direction of Globe Life i.e., Globe Life and Genworth Financial go up and down completely randomly.
Pair Corralation between Globe Life and Genworth Financial
Allowing for the 90-day total investment horizon Globe Life is expected to generate 1.61 times less return on investment than Genworth Financial. In addition to that, Globe Life is 3.06 times more volatile than Genworth Financial. It trades about 0.02 of its total potential returns per unit of risk. Genworth Financial is currently generating about 0.09 per unit of volatility. If you would invest 615.00 in Genworth Financial on August 27, 2024 and sell it today you would earn a total of 162.00 from holding Genworth Financial or generate 26.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Life vs. Genworth Financial
Performance |
| Timeline |
| Globe Life |
| Genworth Financial |
Globe Life and Genworth Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Life and Genworth Financial
The main advantage of trading using opposite Globe Life and Genworth Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life position performs unexpectedly, Genworth 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 Genworth Financial will offset losses from the drop in Genworth Financial's long position.| Globe Life vs. Prudential Public Limited | Globe Life vs. CNO Financial Group | Globe Life vs. MetLife Preferred Stock | Globe Life vs. MetLife |
| Genworth Financial vs. Morningstar Unconstrained Allocation | Genworth Financial vs. Via Renewables | Genworth Financial vs. Sitka Gold Corp | Genworth Financial vs. MSCI ACWI exAUCONSUMER |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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