Correlation Between Life Insurance and Citizens
Can any of the company-specific risk be diversified away by investing in both Life Insurance and Citizens 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 Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Citizens, you can compare the effects of market volatilities on Life Insurance and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Citizens.
Diversification Opportunities for Life Insurance and Citizens
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Life and Citizens is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Life Insurance i.e., Life Insurance and Citizens go up and down completely randomly.
Pair Corralation between Life Insurance and Citizens
Assuming the 90 days horizon Life Insurance is expected to under-perform the Citizens. But the pink sheet apears to be less risky and, when comparing its historical volatility, Life Insurance is 1.43 times less risky than Citizens. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Citizens is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 265.00 in Citizens on September 12, 2024 and sell it today you would earn a total of 149.00 from holding Citizens or generate 56.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 49.72% |
| Values | Daily Returns |
Life Insurance vs. Citizens
Performance |
| Timeline |
| Life Insurance |
| Citizens |
Life Insurance and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Citizens
The main advantage of trading using opposite Life Insurance and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| Life Insurance vs. Citizens | Life Insurance vs. Sun Life Financial | Life Insurance vs. Kinsale Capital Group | Life Insurance vs. Tencent Music Entertainment |
| Citizens vs. Lincoln National | Citizens vs. Aflac Incorporated | Citizens vs. Unum Group | Citizens vs. Manulife 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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