Correlation Between American Equity and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both American Equity 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 American Equity and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Equity Investment and MetLife Preferred Stock, you can compare the effects of market volatilities on American Equity 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 American Equity with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Equity and MetLife Preferred.
Diversification Opportunities for American Equity and MetLife Preferred
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and MetLife is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Equity Investment 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 American Equity 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 American Equity Investment 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 American Equity i.e., American Equity and MetLife Preferred go up and down completely randomly.
Pair Corralation between American Equity and MetLife Preferred
If you would invest 5,375 in American Equity Investment on August 28, 2024 and sell it today you would earn a total of 0.00 from holding American Equity Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
American Equity Investment vs. MetLife Preferred Stock
Performance |
| Timeline |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MetLife Preferred Stock |
American Equity and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Equity and MetLife Preferred
The main advantage of trading using opposite American Equity and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Equity 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.| American Equity vs. MetLife Preferred Stock | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock | American Equity vs. Jackson Financial |
| MetLife Preferred vs. Jackson Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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