Correlation Between Globe Life and FG Annuities

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

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

Diversification Opportunities for Globe Life and FG Annuities

-0.15

Correlation Coefficient

Globe Life  FG Annuities

Good diversification

The 3 months correlation between Globe and FG Annuities is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life 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 are associated (or correlated) with FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Globe Life i.e., Globe Life and FG Annuities go up and down completely randomly.

Pair Corralation between Globe Life and FG Annuities

Allowing for the 90-day total investment horizon Globe Life is expected to generate 0.42 times more return on investment than FG Annuities. However, Globe Life is 2.39 times less risky than FG Annuities. It trades about 0.23 of its potential returns per unit of risk. FG Annuities Life is currently generating about -0.05 per unit of risk. If you would invest  10,971  in Globe Life on December 29, 2024 and sell it today you would earn a total of  2,171  from holding Globe Life or generate 19.79% return on investment over 90 days.

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

Globe Life  vs.  FG Annuities Life

Globe Life

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Life are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Globe Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Globe Life and FG Annuities

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

The idea behind Globe Life and FG Annuities Life 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.