Correlation Between Globe Life and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Globe Life and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Life and SLM Corp, you can compare the effects of market volatilities on Globe Life and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and SLM Corp.
Diversification Opportunities for Globe Life and SLM Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globe and SLM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Globe Life i.e., Globe Life and SLM Corp go up and down completely randomly.
Pair Corralation between Globe Life and SLM Corp
Allowing for the 90-day total investment horizon Globe Life is expected to generate 4.23 times less return on investment than SLM Corp. But when comparing it to its historical volatility, Globe Life is 2.19 times less risky than SLM Corp. It trades about 0.14 of its potential returns per unit of risk. SLM Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,235 in SLM Corp on August 27, 2024 and sell it today you would earn a total of 478.00 from holding SLM Corp or generate 21.39% 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. SLM Corp
Performance |
| Timeline |
| Globe Life |
| SLM Corp |
Globe Life and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Life and SLM Corp
The main advantage of trading using opposite Globe Life and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp'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 |
| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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