Correlation Between Unum and Genworth Financial
Can any of the company-specific risk be diversified away by investing in both Unum and Genworth Financial 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 Unum and Genworth Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and Genworth Financial, you can compare the effects of market volatilities on Unum and Genworth Financial 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 Unum with a short position of Genworth Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and Genworth Financial.
Diversification Opportunities for Unum and Genworth Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unum and Genworth is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and Genworth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genworth Financial and Unum 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 Unum Group are associated (or correlated) with Genworth Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genworth Financial has no effect on the direction of Unum i.e., Unum and Genworth Financial go up and down completely randomly.
Pair Corralation between Unum and Genworth Financial
Considering the 90-day investment horizon Unum Group is expected to generate 0.96 times more return on investment than Genworth Financial. However, Unum Group is 1.04 times less risky than Genworth Financial. It trades about 0.48 of its potential returns per unit of risk. Genworth Financial is currently generating about 0.28 per unit of risk. If you would invest 6,163 in Unum Group on August 30, 2024 and sell it today you would earn a total of 1,544 from holding Unum Group or generate 25.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unum Group vs. Genworth Financial
Performance |
| Timeline |
| Unum Group |
| Genworth Financial |
Unum and Genworth Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unum and Genworth Financial
The main advantage of trading using opposite Unum and Genworth Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum position performs unexpectedly, Genworth Financial 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 Genworth Financial will offset losses from the drop in Genworth Financial's long position.| Unum vs. Prudential Financial | Unum vs. MetLife | Unum vs. Jackson Financial | Unum vs. Manulife Financial Corp |
| Genworth Financial vs. MetLife Preferred Stock | Genworth Financial vs. Prudential Public Limited | Genworth Financial vs. Primerica | Genworth Financial vs. CNO Financial Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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