Correlation Between Pekin Life and UTG

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

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

Diversification Opportunities for Pekin Life and UTG

0.73

Correlation Coefficient

Pekin Life  UTG

Poor diversification

The 3 months correlation between Pekin and UTG is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and UTG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTG Inc and Pekin 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and UTG go up and down completely randomly.

Pair Corralation between Pekin Life and UTG

If you would invest  1,152  in Pekin Life Insurance on September 20, 2024 and sell it today you would earn a total of  24.00  from holding Pekin Life Insurance or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Pekin Life Insurance  vs.  UTG Inc

Pekin Life Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Pekin Life and UTG

The main advantage of trading using opposite Pekin Life and UTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin 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 Pekin Life Insurance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.