Correlation Between AIA Group and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both AIA Group and MetLife Preferred 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 AIA Group and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIA Group Ltd and MetLife Preferred Stock, you can compare the effects of market volatilities on AIA Group and MetLife Preferred 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 AIA Group with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIA Group and MetLife Preferred.
Diversification Opportunities for AIA Group and MetLife Preferred
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AIA and MetLife is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AIA Group Ltd and MetLife Preferred Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife Preferred Stock and AIA Group 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 AIA Group Ltd are associated (or correlated) with MetLife Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife Preferred Stock has no effect on the direction of AIA Group i.e., AIA Group and MetLife Preferred go up and down completely randomly.
Pair Corralation between AIA Group and MetLife Preferred
Assuming the 90 days horizon AIA Group Ltd is expected to under-perform the MetLife Preferred. In addition to that, AIA Group is 4.32 times more volatile than MetLife Preferred Stock. It trades about -0.04 of its total potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.09 per unit of volatility. If you would invest 2,501 in MetLife Preferred Stock on October 22, 2024 and sell it today you would earn a total of 11.00 from holding MetLife Preferred Stock or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIA Group Ltd vs. MetLife Preferred Stock
Performance |
| Timeline |
| AIA Group |
| MetLife Preferred Stock |
AIA Group and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIA Group and MetLife Preferred
The main advantage of trading using opposite AIA Group and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIA Group position performs unexpectedly, MetLife Preferred 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 MetLife Preferred will offset losses from the drop in MetLife Preferred's long position.| AIA Group vs. Atlantic American | AIA Group vs. Ping An Insurance | AIA Group vs. China Life Insurance | AIA Group vs. Sanlam Ltd PK |
| MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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