Correlation Between Primerica and Lincoln National

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

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

Diversification Opportunities for Primerica and Lincoln National

0.93

Correlation Coefficient

Primerica  Lincoln National

Almost no diversification

The 3 months correlation between Primerica and Lincoln is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Primerica and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Primerica i.e., Primerica and Lincoln National go up and down completely randomly.

Pair Corralation between Primerica and Lincoln National

Considering the 90-day investment horizon Primerica is expected to generate 0.57 times more return on investment than Lincoln National. However, Primerica is 1.76 times less risky than Lincoln National. It trades about 0.12 of its potential returns per unit of risk. Lincoln National is currently generating about 0.03 per unit of risk. If you would invest  13,752  in Primerica on September 2, 2024 and sell it today you would earn a total of  16,523  from holding Primerica or generate 120.15% 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.  Lincoln National

Primerica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 16 (%) 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.

Lincoln National

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lincoln National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primerica and Lincoln National

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

The idea behind Primerica and Lincoln National 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.