Correlation Between Brighthouse Financial and Citizens
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Citizens 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 Brighthouse Financial and Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Citizens, you can compare the effects of market volatilities on Brighthouse Financial and Citizens 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 Brighthouse Financial with a short position of Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Citizens.
Diversification Opportunities for Brighthouse Financial and Citizens
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brighthouse and Citizens is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Citizens go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Citizens
Considering the 90-day investment horizon Brighthouse Financial is expected to generate 1.21 times less return on investment than Citizens. But when comparing it to its historical volatility, Brighthouse Financial is 1.44 times less risky than Citizens. It trades about 0.06 of its potential returns per unit of risk. Citizens is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 209.00 in Citizens on January 25, 2024 and sell it today you would earn a total of 4.00 from holding Citizens or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Citizens
Performance |
| Timeline |
| Brighthouse Financial |
| Citizens |
Brighthouse Financial and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Citizens
The main advantage of trading using opposite Brighthouse Financial and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| Brighthouse Financial vs. Prudential Financial | Brighthouse Financial vs. Lincoln National | Brighthouse Financial vs. Aflac Incorporated | Brighthouse Financial vs. Unum Group |
| Citizens vs. Vericity | Citizens vs. CNO Financial Group | Citizens vs. National Western Life | Citizens vs. Brighthouse Financial |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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