Correlation Between Lincoln National and Primerica

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

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

Diversification Opportunities for Lincoln National and Primerica

0.92

Correlation Coefficient

Lincoln National  Primerica

Almost no diversification

The 3 months correlation between Lincoln and Primerica is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Primerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primerica and Lincoln National 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 Lincoln National are associated (or correlated) with Primerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primerica has no effect on the direction of Lincoln National i.e., Lincoln National and Primerica go up and down completely randomly.

Pair Corralation between Lincoln National and Primerica

Considering the 90-day investment horizon Lincoln National is expected to generate 1.82 times more return on investment than Primerica. However, Lincoln National is 1.82 times more volatile than Primerica. It trades about 0.04 of its potential returns per unit of risk. Primerica is currently generating about 0.05 per unit of risk. If you would invest  3,098  in Lincoln National on September 27, 2024 and sell it today you would earn a total of  114.00  from holding Lincoln National or generate 3.68% return on investment over 90 days.

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

Lincoln National  vs.  Primerica

Lincoln National

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Primerica

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Primerica is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lincoln National and Primerica

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

The idea behind Lincoln National and Primerica 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.