Correlation Between Lincoln National and FG Annuities

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

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

Diversification Opportunities for Lincoln National and FG Annuities

0.48

Correlation Coefficient

Lincoln National  FG Annuities

Very weak diversification

The 3 months correlation between Lincoln and FG Annuities is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National 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 Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and FG Annuities go up and down completely randomly.

Pair Corralation between Lincoln National and FG Annuities

Assuming the 90 days trading horizon Lincoln National is expected to generate 0.31 times more return on investment than FG Annuities. However, Lincoln National is 3.19 times less risky than FG Annuities. It trades about -0.07 of its potential returns per unit of risk. FG Annuities Life is currently generating about -0.11 per unit of risk. If you would invest  2,799  in Lincoln National on October 26, 2024 and sell it today you would lose (57.00) from holding Lincoln National or give up 2.04% of portfolio value over 90 days.

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

Lincoln National  vs.  FG Annuities Life

Lincoln National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lincoln National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FG Annuities Life

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, FG Annuities may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lincoln National and FG Annuities

The main advantage of trading using opposite Lincoln National and FG Annuities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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 Lincoln National 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.