Correlation Between Aflac Incorporated and R1 RCM

Can any of the company-specific risk be diversified away by investing in both Aflac Incorporated and R1 RCM 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 Aflac Incorporated and R1 RCM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aflac Incorporated and R1 RCM Inc, you can compare the effects of market volatilities on Aflac Incorporated and R1 RCM 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 Aflac Incorporated with a short position of R1 RCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aflac Incorporated and R1 RCM.

Diversification Opportunities for Aflac Incorporated and R1 RCM

-0.26

Correlation Coefficient

Aflac Incorporated  R1 RCM

Very good diversification

The 3 months correlation between Aflac and RCM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and R1 RCM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R1 RCM Inc and Aflac Incorporated 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 Aflac Incorporated are associated (or correlated) with R1 RCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R1 RCM Inc has no effect on the direction of Aflac Incorporated i.e., Aflac Incorporated and R1 RCM go up and down completely randomly.

Pair Corralation between Aflac Incorporated and R1 RCM

Considering the 90-day investment horizon Aflac Incorporated is expected to generate 0.45 times more return on investment than R1 RCM. However, Aflac Incorporated is 2.2 times less risky than R1 RCM. It trades about 0.24 of its potential returns per unit of risk. R1 RCM Inc is currently generating about 0.04 per unit of risk. If you would invest  8,406  in Aflac Incorporated on February 28, 2024 and sell it today you would earn a total of  363.00  from holding Aflac Incorporated or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aflac Incorporated  vs.  R1 RCM Inc

Aflac Incorporated

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Aflac Incorporated may actually be approaching a critical reversion point that can send shares even higher in June 2024.

R1 RCM Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days R1 RCM Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aflac Incorporated and R1 RCM

The main advantage of trading using opposite Aflac Incorporated and R1 RCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aflac Incorporated position performs unexpectedly, R1 RCM 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 R1 RCM will offset losses from the drop in R1 RCM's long position.

The idea behind Aflac Incorporated and R1 RCM Inc 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.