Correlation Between FG Annuities and CME

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

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

Diversification Opportunities for FG Annuities and CME

0.11

Correlation Coefficient

FG Annuities  CME

Average diversification

The 3 months correlation between FG Annuities and CME is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and FG Annuities 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 FG Annuities Life are associated (or correlated) with CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of FG Annuities i.e., FG Annuities and CME go up and down completely randomly.

Pair Corralation between FG Annuities and CME

Allowing for the 90-day total investment horizon FG Annuities Life is expected to under-perform the CME. In addition to that, FG Annuities is 2.15 times more volatile than CME Group. It trades about -0.06 of its total potential returns per unit of risk. CME Group is currently generating about 0.02 per unit of volatility. If you would invest  28,352  in CME Group on May 7, 2025 and sell it today you would earn a total of  358.00  from holding CME Group or generate 1.26% return on investment over 90 days.

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

FG Annuities Life  vs.  CME Group

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CME Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CME Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CME is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FG Annuities and CME

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

The idea behind FG Annuities Life and CME Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.