Correlation Between Abacus Life and Reinsurance Group

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

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

Diversification Opportunities for Abacus Life and Reinsurance Group

0.39

Correlation Coefficient

Abacus Life  Reinsurance Group

Weak diversification

The 3 months correlation between Abacus and Reinsurance is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Abacus Life i.e., Abacus Life and Reinsurance Group go up and down completely randomly.

Pair Corralation between Abacus Life and Reinsurance Group

Considering the 90-day investment horizon Abacus Life is expected to under-perform the Reinsurance Group. In addition to that, Abacus Life is 8.97 times more volatile than Reinsurance Group of. It trades about -0.14 of its total potential returns per unit of risk. Reinsurance Group of is currently generating about -0.08 per unit of volatility. If you would invest  2,489  in Reinsurance Group of on September 27, 2024 and sell it today you would lose (43.00) from holding Reinsurance Group of or give up 1.73% of portfolio value over 90 days.

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

Abacus Life  vs.  Reinsurance Group of

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 fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Reinsurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reinsurance Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Reinsurance Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Abacus Life and Reinsurance Group

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

The idea behind Abacus Life and Reinsurance Group of 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.