Correlation Between Abacus Life and Lincoln National

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

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

Diversification Opportunities for Abacus Life and Lincoln National

0.05

Correlation Coefficient

Abacus Life  Lincoln National

Significant diversification

The 3 months correlation between Abacus and Lincoln is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and Abacus Life 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 Abacus Life are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Abacus Life i.e., Abacus Life and Lincoln National go up and down completely randomly.

Pair Corralation between Abacus Life and Lincoln National

Considering the 90-day investment horizon Abacus Life is expected to generate 1.04 times more return on investment than Lincoln National. However, Abacus Life is 1.04 times more volatile than Lincoln National. It trades about -0.05 of its potential returns per unit of risk. Lincoln National is currently generating about -0.36 per unit of risk. If you would invest  1,218  in Abacus Life on January 28, 2024 and sell it today you would lose (25.00) from holding Abacus Life or give up 2.05% of portfolio value over 90 days.

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

Abacus Life  vs.  Lincoln National

Abacus Life

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lincoln National

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Abacus Life and Lincoln National

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

The idea behind Abacus Life and Lincoln National 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.