Correlation Between American National and Lincoln National

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

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

Diversification Opportunities for American National and Lincoln National

-0.45

Correlation Coefficient

American National  Lincoln National

Very good diversification

The 3 months correlation between American and Lincoln is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American National Group and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and American National 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 American National Group are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of American National i.e., American National and Lincoln National go up and down completely randomly.

Pair Corralation between American National and Lincoln National

Assuming the 90 days trading horizon American National Group is expected to generate 0.53 times more return on investment than Lincoln National. However, American National Group is 1.87 times less risky than Lincoln National. It trades about 0.11 of its potential returns per unit of risk. Lincoln National is currently generating about -0.03 per unit of risk. If you would invest  2,474  in American National Group on October 25, 2024 and sell it today you would earn a total of  56.00  from holding American National Group or generate 2.26% return on investment over 90 days.

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

American National Group  vs.  Lincoln National

American National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American National Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, American National is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lincoln National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lincoln National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American National and Lincoln National

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

The idea behind American National Group and Lincoln National 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.