Correlation Between Federated Premier and Corebridge Financial

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

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

Diversification Opportunities for Federated Premier and Corebridge Financial

-0.71

Correlation Coefficient

Federated Premier  Corebridge Financial

Pay attention - limited upside

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

Pair Corralation between Federated Premier and Corebridge Financial

Considering the 90-day investment horizon Federated Premier is expected to generate 4.86 times less return on investment than Corebridge Financial. But when comparing it to its historical volatility, Federated Premier Municipal is 3.13 times less risky than Corebridge Financial. It trades about 0.05 of its potential returns per unit of risk. Corebridge Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,653  in Corebridge Financial on September 5, 2024 and sell it today you would earn a total of  1,577  from holding Corebridge Financial or generate 95.4% return on investment over 90 days.

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

Federated Premier Municipal  vs.  Corebridge Financial

Federated Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Corebridge Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corebridge Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental drivers, Corebridge Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federated Premier and Corebridge Financial

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

The idea behind Federated Premier Municipal and Corebridge 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.