Correlation Between Aflac Incorporated and Consorcio ARA

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

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

Diversification Opportunities for Aflac Incorporated and Consorcio ARA

-0.47

Correlation Coefficient

Aflac Incorporated  Consorcio ARA

Very good diversification

The 3 months correlation between Aflac and Consorcio is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and Consorcio ARA S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consorcio ARA S and Aflac Incorporated 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 Aflac Incorporated are associated (or correlated) with Consorcio ARA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consorcio ARA S has no effect on the direction of Aflac Incorporated i.e., Aflac Incorporated and Consorcio ARA go up and down completely randomly.

Pair Corralation between Aflac Incorporated and Consorcio ARA

Considering the 90-day investment horizon Aflac Incorporated is expected to generate 0.11 times more return on investment than Consorcio ARA. However, Aflac Incorporated is 9.08 times less risky than Consorcio ARA. It trades about 0.02 of its potential returns per unit of risk. Consorcio ARA S is currently generating about -0.01 per unit of risk. If you would invest  10,999  in Aflac Incorporated on September 4, 2024 and sell it today you would earn a total of  141.00  from holding Aflac Incorporated or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aflac Incorporated  vs.  Consorcio ARA S

Aflac Incorporated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Aflac Incorporated is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Consorcio ARA S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consorcio ARA S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aflac Incorporated and Consorcio ARA

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

The idea behind Aflac Incorporated and Consorcio ARA S 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.