Correlation Between Loews Corp and Globe Life

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

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

Diversification Opportunities for Loews Corp and Globe Life

0.44

Correlation Coefficient

Loews Corp  Globe Life

Very weak diversification

The 3 months correlation between Loews and Globe is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life and Loews Corp 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 Loews Corp are associated (or correlated) with Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life has no effect on the direction of Loews Corp i.e., Loews Corp and Globe Life go up and down completely randomly.

Pair Corralation between Loews Corp and Globe Life

Taking into account the 90-day investment horizon Loews Corp is expected to generate 5.13 times less return on investment than Globe Life. But when comparing it to its historical volatility, Loews Corp is 1.17 times less risky than Globe Life. It trades about 0.05 of its potential returns per unit of risk. Globe Life is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  10,655  in Globe Life on December 16, 2024 and sell it today you would earn a total of  1,886  from holding Globe Life or generate 17.7% return on investment over 90 days.

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

Loews Corp  vs.  Globe Life

Loews Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Globe Life

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Life are ranked lower than 15 (%) 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.

Pair Trading with Loews Corp and Globe Life

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

The idea behind Loews Corp and Globe 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.