Correlation Between Globe Life and Orix Corp

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

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

Diversification Opportunities for Globe Life and Orix Corp

0.0

Correlation Coefficient

Globe Life  Orix Corp

Pay attention - limited upside

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

Pair Corralation between Globe Life and Orix Corp

Allowing for the 90-day total investment horizon Globe Life is expected to generate 0.97 times more return on investment than Orix Corp. However, Globe Life is 1.03 times less risky than Orix Corp. It trades about 0.2 of its potential returns per unit of risk. Orix Corp Ads is currently generating about 0.03 per unit of risk. If you would invest  11,061  in Globe Life on December 26, 2024 and sell it today you would earn a total of  1,929  from holding Globe Life or generate 17.44% return on investment over 90 days.

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

Globe Life  vs.  Orix Corp Ads

Globe Life

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Life are ranked lower than 16 (%) 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.

Orix Corp Ads

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Globe Life and Orix Corp

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

The idea behind Globe Life and Orix Corp Ads 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.