Correlation Between Primerica and FG Annuities

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

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

Diversification Opportunities for Primerica and FG Annuities

0.81

Correlation Coefficient

Primerica  FG Annuities

Very poor diversification

The 3 months correlation between Primerica and FG Annuities is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Primerica 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 Primerica 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 Primerica 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 Primerica i.e., Primerica and FG Annuities go up and down completely randomly.

Pair Corralation between Primerica and FG Annuities

Considering the 90-day investment horizon Primerica is expected to under-perform the FG Annuities. But the stock apears to be less risky and, when comparing its historical volatility, Primerica is 1.69 times less risky than FG Annuities. The stock trades about -0.37 of its potential returns per unit of risk. The FG Annuities Life is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,513  in FG Annuities Life on September 19, 2024 and sell it today you would lose (158.00) from holding FG Annuities Life or give up 3.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Primerica  vs.  FG Annuities Life

Primerica

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Primerica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FG Annuities Life

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Primerica and FG Annuities

The main advantage of trading using opposite Primerica and FG Annuities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primerica 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 Primerica 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.