Correlation Between Life Insurance and State Trading

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

Diversification Opportunities for Life Insurance and State Trading

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Life and State is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Trading and Life Insurance 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 Life Insurance are associated (or correlated) with State Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Trading has no effect on the direction of Life Insurance i.e., Life Insurance and State Trading go up and down completely randomly.

Pair Corralation between Life Insurance and State Trading

Assuming the 90 days trading horizon Life Insurance is expected to under-perform the State Trading. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 4.04 times less risky than State Trading. The stock trades about -0.04 of its potential returns per unit of risk. The The State Trading is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,364  in The State Trading on August 28, 2024 and sell it today you would earn a total of  666.00  from holding The State Trading or generate 4.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Life Insurance  vs.  The State Trading

 Performance 
       Timeline  
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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
State Trading 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Life Insurance and State Trading Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Life Insurance and State Trading

The main advantage of trading using opposite Life Insurance and State Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, State Trading 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 State Trading will offset losses from the drop in State Trading's long position.
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The idea behind Life Insurance and The State Trading 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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