Correlation Between Aflac Incorporated and FG Annuities

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

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

Diversification Opportunities for Aflac Incorporated and FG Annuities

0.71

Correlation Coefficient

Aflac Incorporated  FG Annuities

Poor diversification

The 3 months correlation between Aflac and FG Annuities is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life 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 FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Aflac Incorporated i.e., Aflac Incorporated and FG Annuities go up and down completely randomly.

Pair Corralation between Aflac Incorporated and FG Annuities

Considering the 90-day investment horizon Aflac Incorporated is expected to generate 0.47 times more return on investment than FG Annuities. However, Aflac Incorporated is 2.13 times less risky than FG Annuities. It trades about 0.01 of its potential returns per unit of risk. FG Annuities Life is currently generating about -0.1 per unit of risk. If you would invest  10,668  in Aflac Incorporated on November 29, 2024 and sell it today you would earn a total of  5.00  from holding Aflac Incorporated or generate 0.05% return on investment over 90 days.

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

Aflac Incorporated  vs.  FG Annuities Life

Aflac Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aflac Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aflac Incorporated and FG Annuities

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

The idea behind Aflac Incorporated and FG Annuities Life 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.