Correlation Between Emerge Capital and Globe Life

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

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

Diversification Opportunities for Emerge Capital and Globe Life

-0.48

Correlation Coefficient

Emerge Capital  Globe Life

Very good diversification

The 3 months correlation between Emerge and Globe is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Capital Management and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life and Emerge Capital 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 Emerge Capital Management 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 Emerge Capital i.e., Emerge Capital and Globe Life go up and down completely randomly.

Pair Corralation between Emerge Capital and Globe Life

If you would invest  2,567  in Emerge Capital Management on January 19, 2024 and sell it today you would earn a total of  0.00  from holding Emerge Capital Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Emerge Capital Management  vs.  Globe Life

Emerge Capital Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerge Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Emerge Capital is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Globe Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Emerge Capital and Globe Life

The main advantage of trading using opposite Emerge Capital and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerge Capital 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 Emerge Capital Management 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .