Correlation Between UTG and Pekin Life

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

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

Diversification Opportunities for UTG and Pekin Life

0.73

Correlation Coefficient

UTG  Pekin Life

Poor diversification

The 3 months correlation between UTG and Pekin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UTG Inc and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance and UTG 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 UTG Inc are associated (or correlated) with Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of UTG i.e., UTG and Pekin Life go up and down completely randomly.

Pair Corralation between UTG and Pekin Life

Given the investment horizon of 90 days UTG Inc is expected to generate 2.03 times more return on investment than Pekin Life. However, UTG is 2.03 times more volatile than Pekin Life Insurance. It trades about 0.05 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. 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 Together
Strength	Significant
Accuracy	28.28%
Values	Daily Returns

UTG Inc  vs.  Pekin Life Insurance

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.

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.

Pair Trading with UTG and Pekin Life

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

The idea behind UTG Inc and Pekin Life Insurance 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.