Correlation Between Kansas City and Lincoln National

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

Diversification Opportunities for Kansas City and Lincoln National

-0.07

Correlation Coefficient

Kansas City  Lincoln National

Good diversification

The 3 months correlation between Kansas and Lincoln is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kansas City Life and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Kansas City i.e., Kansas City and Lincoln National go up and down completely randomly.

Pair Corralation between Kansas City and Lincoln National

If you would invest  2,678  in Kansas City Life on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Kansas City Life or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Kansas City Life  vs.  Lincoln National

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.

Lincoln National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lincoln National is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kansas City and Lincoln National

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

The idea behind Kansas City Life and Lincoln National 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.