Correlation Between American Equity and MetLife
Can any of the company-specific risk be diversified away by investing in both American Equity and MetLife 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 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, you can compare the effects of market volatilities on American Equity and MetLife 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Equity and MetLife.
Diversification Opportunities for American Equity and MetLife
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and MetLife is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Equity Investment and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of American Equity i.e., American Equity and MetLife go up and down completely randomly.
Pair Corralation between American Equity and MetLife
If you would invest 7,522 in MetLife on August 28, 2024 and sell it today you would earn a total of 1,212 from holding MetLife or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
American Equity Investment vs. MetLife
Performance |
| Timeline |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MetLife |
American Equity and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Equity and MetLife
The main advantage of trading using opposite American Equity and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Equity position performs unexpectedly, MetLife 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 will offset losses from the drop in MetLife'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 vs. Morningstar Unconstrained Allocation | MetLife vs. Via Renewables | MetLife vs. Sitka Gold Corp | MetLife vs. MSCI ACWI exAUCONSUMER |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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