Correlation Between Home First and Life Insurance

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Can any of the company-specific risk be diversified away by investing in both Home First and Life Insurance 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 Home First and Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home First Finance and Life Insurance, you can compare the effects of market volatilities on Home First and Life Insurance 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 Home First with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home First and Life Insurance.

Diversification Opportunities for Home First and Life Insurance

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Home and Life is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Home First Finance and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Home First 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 Home First Finance are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Home First i.e., Home First and Life Insurance go up and down completely randomly.

Pair Corralation between Home First and Life Insurance

Assuming the 90 days trading horizon Home First Finance is expected to generate 1.29 times more return on investment than Life Insurance. However, Home First is 1.29 times more volatile than Life Insurance. It trades about -0.08 of its potential returns per unit of risk. Life Insurance is currently generating about -0.44 per unit of risk. If you would invest  105,080  in Home First Finance on October 16, 2024 and sell it today you would lose (3,240) from holding Home First Finance or give up 3.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.0%
ValuesDaily Returns

Home First Finance  vs.  Life Insurance

 Performance 
       Timeline  
Home First Finance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Home First and Life Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home First and Life Insurance

The main advantage of trading using opposite Home First and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home First position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.
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The idea behind Home First Finance and Life Insurance 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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