Correlation Between Sanlam and Lincoln National
Can any of the company-specific risk be diversified away by investing in both Sanlam and Lincoln National 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 Sanlam and Lincoln National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanlam Ltd PK and Lincoln National, you can compare the effects of market volatilities on Sanlam and Lincoln National 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 Sanlam with a short position of Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanlam and Lincoln National.
Diversification Opportunities for Sanlam and Lincoln National
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sanlam and Lincoln is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Ltd PK and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and Sanlam 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 Sanlam Ltd PK are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Sanlam i.e., Sanlam and Lincoln National go up and down completely randomly.
Pair Corralation between Sanlam and Lincoln National
Assuming the 90 days horizon Sanlam Ltd PK is expected to under-perform the Lincoln National. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sanlam Ltd PK is 2.18 times less risky than Lincoln National. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Lincoln National is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,359 in Lincoln National on August 31, 2024 and sell it today you would earn a total of 186.00 from holding Lincoln National or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanlam Ltd PK vs. Lincoln National
Performance |
| Timeline |
| Sanlam Ltd PK |
| Lincoln National |
Sanlam and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanlam and Lincoln National
The main advantage of trading using opposite Sanlam and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanlam position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.| Sanlam vs. Ping An Insurance | Sanlam vs. CNO Financial Group | Sanlam vs. Genworth Financial | Sanlam vs. MetLife Preferred Stock |
| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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