Correlation Between Unum and FG Annuities

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

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

Diversification Opportunities for Unum and FG Annuities

0.81

Correlation Coefficient

Unum  FG Annuities

Very poor diversification

The 3 months correlation between Unum and FG Annuities is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life and Unum 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 Unum Group are associated (or correlated) with FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Unum i.e., Unum and FG Annuities go up and down completely randomly.

Pair Corralation between Unum and FG Annuities

Considering the 90-day investment horizon Unum Group is expected to generate 0.56 times more return on investment than FG Annuities. However, Unum Group is 1.77 times less risky than FG Annuities. It trades about 0.34 of its potential returns per unit of risk. FG Annuities Life is currently generating about 0.1 per unit of risk. If you would invest  5,478  in Unum Group on September 4, 2024 and sell it today you would earn a total of  2,157  from holding Unum Group or generate 39.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Unum Group  vs.  FG Annuities Life

Unum Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Unum Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Unum displayed solid returns over the last few months and may actually be approaching a breakup point.

FG Annuities Life

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, FG Annuities reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unum and FG Annuities

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

The idea behind Unum Group and FG Annuities Life 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.