Correlation Between ALLSTATE and Pekin Life

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

By analyzing existing cross correlation between ALLSTATE P 535 and Pekin Life Insurance, you can compare the effects of market volatilities on ALLSTATE and Pekin 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 ALLSTATE with a short position of Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Pekin Life.

Diversification Opportunities for ALLSTATE and Pekin Life

0.16

Correlation Coefficient

ALLSTATE  Pekin Life

Average diversification

The 3 months correlation between ALLSTATE and Pekin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 535 and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance and ALLSTATE 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 ALLSTATE P 535 are associated (or correlated) with Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of ALLSTATE i.e., ALLSTATE and Pekin Life go up and down completely randomly.

Pair Corralation between ALLSTATE and Pekin Life

Assuming the 90 days trading horizon ALLSTATE P 535 is expected to generate 2.44 times more return on investment than Pekin Life. However, ALLSTATE is 2.44 times more volatile than Pekin Life Insurance. It trades about 0.02 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.0 per unit of risk. If you would invest  10,012  in ALLSTATE P 535 on December 24, 2024 and sell it today you would earn a total of  79.00  from holding ALLSTATE P 535 or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

ALLSTATE P 535  vs.  Pekin Life Insurance

ALLSTATE P 535

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALLSTATE P 535 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pekin Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pekin Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ALLSTATE and Pekin Life

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

The idea behind ALLSTATE P 535 and Pekin Life Insurance 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..