Correlation Between Abacus Life and Primerica

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

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

Diversification Opportunities for Abacus Life and Primerica

0.13

Correlation Coefficient

Abacus Life  Primerica

Average diversification

The 3 months correlation between Abacus and Primerica is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Primerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primerica 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 Primerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primerica has no effect on the direction of Abacus Life i.e., Abacus Life and Primerica go up and down completely randomly.

Pair Corralation between Abacus Life and Primerica

Considering the 90-day investment horizon Abacus Life is expected to under-perform the Primerica. In addition to that, Abacus Life is 1.75 times more volatile than Primerica. It trades about -0.04 of its total potential returns per unit of risk. Primerica is currently generating about 0.07 per unit of volatility. If you would invest  26,868  in Primerica on December 29, 2024 and sell it today you would earn a total of  1,465  from holding Primerica or generate 5.45% return on investment over 90 days.

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

Abacus Life  vs.  Primerica

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.

Primerica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Primerica is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Abacus Life and Primerica

The main advantage of trading using opposite Abacus Life and Primerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abacus Life position performs unexpectedly, Primerica 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 Primerica will offset losses from the drop in Primerica's long position.

The idea behind Abacus Life and Primerica 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.