Correlation Between AGL Energy and Unum

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

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

Diversification Opportunities for AGL Energy and Unum

0.0

Correlation Coefficient

AGL Energy  Unum

Pay attention - limited upside

The 3 months correlation between AGL and Unum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AGL Energy Limited and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group and AGL Energy 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 AGL Energy Limited are associated (or correlated) with Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of AGL Energy i.e., AGL Energy and Unum go up and down completely randomly.

Pair Corralation between AGL Energy and Unum

If you would invest  7,057  in Unum Group on December 19, 2024 and sell it today you would earn a total of  1,031  from holding Unum Group or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AGL Energy Limited  vs.  Unum Group

AGL Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGL Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGL Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Unum Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unum Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Unum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGL Energy and Unum

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

The idea behind AGL Energy Limited and Unum Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.