Correlation Between National Western and FG Annuities

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Can any of the company-specific risk be diversified away by investing in both National Western 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 National Western and FG Annuities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Western Life and FG Annuities Life, you can compare the effects of market volatilities on National Western 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 National Western with a short position of FG Annuities. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Western and FG Annuities.

Diversification Opportunities for National Western and FG Annuities

NationalFG AnnuitiesDiversified AwayNationalFG AnnuitiesDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between National and FG Annuities is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Western 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 National Western 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 National Western 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 National Western i.e., National Western and FG Annuities go up and down completely randomly.

Pair Corralation between National Western and FG Annuities

If you would invest  4,240  in FG Annuities Life on September 23, 2024 and sell it today you would lose (63.00) from holding FG Annuities Life or give up 1.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy1.54%
ValuesDaily Returns

National Western Life  vs.  FG Annuities Life

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15NWLI FG
       Timeline  
National Western Life 

Risk-Adjusted Performance

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Over the last 90 days National Western Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, National Western is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
FG Annuities Life 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 nearly stable technical and fundamental indicators, FG Annuities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec404244464850

National Western and FG Annuities Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.56-0.35-0.14-0.0566-0.0027070.04330.10.310.520.73 246810
JavaScript chart by amCharts 3.21.15NWLI FG
       Returns  

Pair Trading with National Western and FG Annuities

The main advantage of trading using opposite National Western and FG Annuities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Western 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 National Western 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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