Correlation Between Life Insurance and MPLX LP

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

Diversification Opportunities for Life Insurance and MPLX LP

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Life and MPLX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and MPLX LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLX LP 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 MPLX LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLX LP has no effect on the direction of Life Insurance i.e., Life Insurance and MPLX LP go up and down completely randomly.

Pair Corralation between Life Insurance and MPLX LP

If you would invest  4,759  in MPLX LP on November 9, 2024 and sell it today you would earn a total of  596.00  from holding MPLX LP or generate 12.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Life Insurance  vs.  MPLX LP

 Performance 
       Timeline  
Life Insurance 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Life Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Life Insurance may actually be approaching a critical reversion point that can send shares even higher in March 2025.
MPLX LP 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in MPLX LP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, MPLX LP showed solid returns over the last few months and may actually be approaching a breakup point.

Life Insurance and MPLX LP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Life Insurance and MPLX LP

The main advantage of trading using opposite Life Insurance and MPLX LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, MPLX LP 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 MPLX LP will offset losses from the drop in MPLX LP's long position.
The idea behind Life Insurance and MPLX LP 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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