Correlation Between Primerica and CNO Financial

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

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

Diversification Opportunities for Primerica and CNO Financial

0.94

Correlation Coefficient

Primerica  CNO Financial

Almost no diversification

The 3 months correlation between Primerica and CNO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Primerica and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group and Primerica 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 Primerica are associated (or correlated) with CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of Primerica i.e., Primerica and CNO Financial go up and down completely randomly.

Pair Corralation between Primerica and CNO Financial

Considering the 90-day investment horizon Primerica is expected to generate 1.23 times less return on investment than CNO Financial. But when comparing it to its historical volatility, Primerica is 1.27 times less risky than CNO Financial. It trades about 0.1 of its potential returns per unit of risk. CNO Financial Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,136  in CNO Financial Group on September 11, 2024 and sell it today you would earn a total of  1,719  from holding CNO Financial Group or generate 80.48% return on investment over 90 days.

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

Primerica  vs.  CNO Financial Group

Primerica

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Primerica demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CNO Financial Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CNO Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primerica and CNO Financial

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

The idea behind Primerica and CNO Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.