Correlation Between FG Annuities and Globe Life

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

Diversification Opportunities for FG Annuities and Globe Life

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between FG Annuities and Globe is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life and FG Annuities 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 FG Annuities Life are associated (or correlated) with Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life has no effect on the direction of FG Annuities i.e., FG Annuities and Globe Life go up and down completely randomly.

Pair Corralation between FG Annuities and Globe Life

Allowing for the 90-day total investment horizon FG Annuities Life is expected to generate 3.21 times more return on investment than Globe Life. However, FG Annuities is 3.21 times more volatile than Globe Life. It trades about 0.08 of its potential returns per unit of risk. Globe Life is currently generating about 0.03 per unit of risk. If you would invest  1,615  in FG Annuities Life on December 20, 2023 and sell it today you would earn a total of  2,095  from holding FG Annuities Life or generate 129.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy66.8%
ValuesDaily Returns

FG Annuities Life  vs.  Globe Life

 Performance 
       Timeline  
FG Annuities Life 

Risk-Adjusted Performance

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Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Globe Life 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Globe Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Globe Life is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

FG Annuities and Globe Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FG Annuities and Globe Life

The main advantage of trading using opposite FG Annuities and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Annuities position performs unexpectedly, Globe 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 Globe Life will offset losses from the drop in Globe Life's long position.
The idea behind FG Annuities Life and Globe 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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