Correlation Between Globe Life and UTG

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

Diversification Opportunities for Globe Life and UTG

-0.71

Correlation Coefficient

Globe Life  UTG

Pay attention - limited upside

The 3 months correlation between Globe and UTG is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 425 and UTG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTG Inc 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 UTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTG Inc has no effect on the direction of Globe Life i.e., Globe Life and UTG go up and down completely randomly.

Pair Corralation between Globe Life and UTG

Assuming the 90 days horizon Globe Life is expected to generate 7.88 times less return on investment than UTG. But when comparing it to its historical volatility, Globe Life 425 is 1.96 times less risky than UTG. It trades about 0.01 of its potential returns per unit of risk. UTG Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,506  in UTG Inc on September 20, 2024 and sell it today you would earn a total of  454.00  from holding UTG Inc or generate 18.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.28%
Values	Daily Returns

Globe Life 425  vs.  UTG Inc

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.

UTG Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, UTG is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Globe Life and UTG

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

The idea behind Globe Life 425 and UTG Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.