Correlation Between Kansas City and Aflac Incorporated

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

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

Diversification Opportunities for Kansas City and Aflac Incorporated

0.47

Correlation Coefficient

Kansas City  Aflac Incorporated

Very weak diversification

The 3 months correlation between Kansas and Aflac is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kansas City Life and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated and Kansas City 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 Kansas City Life are associated (or correlated) with Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Kansas City i.e., Kansas City and Aflac Incorporated go up and down completely randomly.

Pair Corralation between Kansas City and Aflac Incorporated

If you would invest  9,345  in Aflac Incorporated on September 21, 2024 and sell it today you would earn a total of  944.00  from holding Aflac Incorporated or generate 10.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.93%
Values	Daily Returns

Kansas City Life  vs.  Aflac Incorporated

Kansas City Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kansas City Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Kansas City is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Aflac Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aflac Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kansas City and Aflac Incorporated

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

The idea behind Kansas City Life and Aflac Incorporated 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.