Correlation Between FG Annuities and Citizens

Can any of the company-specific risk be diversified away by investing in both FG Annuities and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on FG Annuities and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Annuities and Citizens.

Diversification Opportunities for FG Annuities and Citizens

0.62

Correlation Coefficient

FG Annuities  Citizens

Poor diversification

The 3 months correlation between FG Annuities and Citizens is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of FG Annuities i.e., FG Annuities and Citizens go up and down completely randomly.

Pair Corralation between FG Annuities and Citizens

Allowing for the 90-day total investment horizon FG Annuities Life is expected to generate 0.76 times more return on investment than Citizens. However, FG Annuities Life is 1.32 times less risky than Citizens. It trades about 0.12 of its potential returns per unit of risk. Citizens is currently generating about -0.02 per unit of risk. If you would invest  1,786  in FG Annuities Life on February 5, 2024 and sell it today you would earn a total of  2,204  from holding FG Annuities Life or generate 123.4% return on investment over 90 days.

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

FG Annuities Life  vs.  Citizens

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Citizens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens 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 forward indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with FG Annuities and Citizens

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

The idea behind FG Annuities Life and Citizens 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.