Correlation Between Globe Life and KKRS

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

By analyzing existing cross correlation between Globe Life 425 and KKRS, you can compare the effects of market volatilities on Globe Life and KKRS 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 Globe Life with a short position of KKRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and KKRS.

Diversification Opportunities for Globe Life and KKRS

0.84

Correlation Coefficient

Globe Life  KKRS

Very poor diversification

The 3 months correlation between Globe and KKRS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 425 and KKRS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKRS and Globe 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 Globe Life 425 are associated (or correlated) with KKRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKRS has no effect on the direction of Globe Life i.e., Globe Life and KKRS go up and down completely randomly.

Pair Corralation between Globe Life and KKRS

Assuming the 90 days horizon Globe Life 425 is expected to generate 1.3 times more return on investment than KKRS. However, Globe Life is 1.3 times more volatile than KKRS. It trades about 0.03 of its potential returns per unit of risk. KKRS is currently generating about -0.01 per unit of risk. If you would invest  1,610  in Globe Life 425 on September 21, 2024 and sell it today you would earn a total of  48.00  from holding Globe Life 425 or generate 2.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.07%
Values	Daily Returns

Globe Life 425  vs.  KKRS

Globe Life 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life 425 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

KKRS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KKRS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Globe Life and KKRS

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

The idea behind Globe Life 425 and KKRS 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 Transaction History module to view history of all your transactions and understand their impact on performance.