Correlation Between Genworth Financial and FG Annuities

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

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

Diversification Opportunities for Genworth Financial and FG Annuities

0.28

Correlation Coefficient

Genworth Financial  FG Annuities

Modest diversification

The 3 months correlation between Genworth and FG Annuities is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genworth Financial and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life and Genworth 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 Genworth Financial are associated (or correlated) with FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Genworth Financial i.e., Genworth Financial and FG Annuities go up and down completely randomly.

Pair Corralation between Genworth Financial and FG Annuities

Considering the 90-day investment horizon Genworth Financial is expected to generate 9.43 times less return on investment than FG Annuities. But when comparing it to its historical volatility, Genworth Financial is 1.57 times less risky than FG Annuities. It trades about 0.01 of its potential returns per unit of risk. FG Annuities Life is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,044  in FG Annuities Life on January 26, 2024 and sell it today you would earn a total of  865.00  from holding FG Annuities Life or generate 28.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Genworth Financial  vs.  FG Annuities Life

Genworth Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genworth Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genworth Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

FG Annuities Life

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Genworth Financial and FG Annuities

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

The idea behind Genworth Financial and FG Annuities 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.