Correlation Between Abacus Life and Citizens

Can any of the company-specific risk be diversified away by investing in both Abacus Life 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 Abacus Life and Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abacus Life and Citizens, you can compare the effects of market volatilities on Abacus Life 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 Abacus Life with a short position of Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life and Citizens.

Diversification Opportunities for Abacus Life and Citizens

0.21

Correlation Coefficient

Abacus Life  Citizens

Modest diversification

The 3 months correlation between Abacus and Citizens is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens and Abacus Life 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 Abacus Life 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 Abacus Life i.e., Abacus Life and Citizens go up and down completely randomly.

Pair Corralation between Abacus Life and Citizens

Considering the 90-day investment horizon Abacus Life is expected to under-perform the Citizens. But the stock apears to be less risky and, when comparing its historical volatility, Abacus Life is 1.53 times less risky than Citizens. The stock trades about -0.04 of its potential returns per unit of risk. The Citizens is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Citizens on December 29, 2024 and sell it today you would earn a total of  66.00  from holding Citizens or generate 16.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Abacus Life  vs.  Citizens

Abacus Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abacus Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Citizens

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abacus Life and Citizens

The main advantage of trading using opposite Abacus Life and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abacus Life 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.

The idea behind Abacus Life and Citizens 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.