Correlation Between Globe Life and CNO Financial

Can any of the company-specific risk be diversified away by investing in both Globe 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 Globe 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 Globe Life 425 and CNO Financial Group, you can compare the effects of market volatilities on Globe 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 Globe Life with a short position of CNO Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and CNO Financial.

Diversification Opportunities for Globe Life and CNO Financial

-0.75

Correlation Coefficient

Globe Life  CNO Financial

Pay attention - limited upside

The 3 months correlation between Globe and CNO is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 425 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 Globe 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 Globe Life 425 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 Globe Life i.e., Globe Life and CNO Financial go up and down completely randomly.

Pair Corralation between Globe Life and CNO Financial

Assuming the 90 days horizon Globe Life 425 is expected to generate 1.2 times more return on investment than CNO Financial. However, Globe Life is 1.2 times more volatile than CNO Financial Group. It trades about 0.03 of its potential returns per unit of risk. CNO Financial Group is currently generating about -0.16 per unit of risk. If you would invest  1,660  in Globe Life 425 on September 19, 2024 and sell it today you would earn a total of  8.00  from holding Globe Life 425 or generate 0.48% return on investment over 90 days.

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

Globe Life 425  vs.  CNO Financial Group

Globe Life 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life 425 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CNO Financial Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 4 (%) 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 January 2025.

Pair Trading with Globe Life and CNO Financial

The main advantage of trading using opposite Globe Life and CNO Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe 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 Globe Life 425 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.