Correlation Between Globe Life and Lincoln National
Can any of the company-specific risk be diversified away by investing in both Globe Life and Lincoln National 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 Lincoln National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Life and Lincoln National, you can compare the effects of market volatilities on Globe Life and Lincoln National 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 Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and Lincoln National.
Diversification Opportunities for Globe Life and Lincoln National
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globe and Lincoln is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Globe Life i.e., Globe Life and Lincoln National go up and down completely randomly.
Pair Corralation between Globe Life and Lincoln National
Allowing for the 90-day total investment horizon Globe Life is expected to under-perform the Lincoln National. But the stock apears to be less risky and, when comparing its historical volatility, Globe Life is 1.85 times less risky than Lincoln National. The stock trades about -0.03 of its potential returns per unit of risk. The Lincoln National is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,259 in Lincoln National on August 24, 2024 and sell it today you would earn a total of 290.00 from holding Lincoln National or generate 8.9% 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. Lincoln National
Performance |
| Timeline |
| Globe Life |
| Lincoln National |
Globe Life and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Life and Lincoln National
The main advantage of trading using opposite Globe Life and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National'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 |
| Lincoln National vs. Manulife Financial Corp | Lincoln National vs. Brighthouse Financial | Lincoln National vs. FG Annuities Life | Lincoln National vs. Jackson Financial |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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