Correlation Between Lincoln National and Citizens
Can any of the company-specific risk be diversified away by investing in both Lincoln National 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 Lincoln National and Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Citizens, you can compare the effects of market volatilities on Lincoln National 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 Lincoln National with a short position of Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Citizens.
Diversification Opportunities for Lincoln National and Citizens
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Citizens is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens and Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and Citizens go up and down completely randomly.
Pair Corralation between Lincoln National and Citizens
Considering the 90-day investment horizon Lincoln National is expected to generate 1.65 times less return on investment than Citizens. But when comparing it to its historical volatility, Lincoln National is 1.66 times less risky than Citizens. It trades about 0.07 of its potential returns per unit of risk. Citizens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Citizens on August 31, 2024 and sell it today you would earn a total of 234.00 from holding Citizens or generate 109.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln National vs. Citizens
Performance |
| Timeline |
| Lincoln National |
| Citizens |
Lincoln National and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Citizens
The main advantage of trading using opposite Lincoln National and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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.| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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