Correlation Between Generic Engineering and Life Insurance

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

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

Diversification Opportunities for Generic Engineering and Life Insurance

0.22

Correlation Coefficient

Generic Engineering  Life Insurance

Modest diversification

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

Pair Corralation between Generic Engineering and Life Insurance

Assuming the 90 days trading horizon Generic Engineering Construction is expected to under-perform the Life Insurance. In addition to that, Generic Engineering is 1.57 times more volatile than Life Insurance. It trades about -0.02 of its total potential returns per unit of risk. Life Insurance is currently generating about 0.03 per unit of volatility. If you would invest  69,670  in Life Insurance on October 9, 2024 and sell it today you would earn a total of  17,915  from holding Life Insurance or generate 25.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Generic Engineering Constructi  vs.  Life Insurance

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Generic Engineering and Life Insurance

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

The idea behind Generic Engineering Construction and Life Insurance 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.