Correlation Between FG Annuities and Brighthouse Financial

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

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

Diversification Opportunities for FG Annuities and Brighthouse Financial

-0.22

Correlation Coefficient

FG Annuities  Brighthouse Financial

Very good diversification

The 3 months correlation between FG Annuities and Brighthouse is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and FG Annuities 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 FG Annuities Life are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of FG Annuities i.e., FG Annuities and Brighthouse Financial go up and down completely randomly.

Pair Corralation between FG Annuities and Brighthouse Financial

Allowing for the 90-day total investment horizon FG Annuities Life is expected to under-perform the Brighthouse Financial. In addition to that, FG Annuities is 1.63 times more volatile than Brighthouse Financial. It trades about -0.2 of its total potential returns per unit of risk. Brighthouse Financial is currently generating about 0.03 per unit of volatility. If you would invest  1,944  in Brighthouse Financial on October 6, 2024 and sell it today you would earn a total of  12.00  from holding Brighthouse Financial or generate 0.62% return on investment over 90 days.

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

FG Annuities Life  vs.  Brighthouse Financial

FG Annuities Life

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, FG Annuities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Brighthouse Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brighthouse Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brighthouse Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FG Annuities and Brighthouse Financial

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

The idea behind FG Annuities Life and Brighthouse Financial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.