Correlation Between Federal Life and CNO Financial

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

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

Diversification Opportunities for Federal Life and CNO Financial

0.0

Correlation Coefficient

Federal Life  CNO Financial

Pay attention - limited upside

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

Pair Corralation between Federal Life and CNO Financial

If you would invest  3,702  in CNO Financial Group on December 28, 2024 and sell it today you would earn a total of  446.00  from holding CNO Financial Group or generate 12.05% return on investment over 90 days.

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

Federal Life Group  vs.  CNO Financial Group

Federal Life Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Life Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Federal Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CNO Financial Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CNO Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Federal Life and CNO Financial

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

The idea behind Federal Life Group and CNO Financial 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.