Correlation Between Dow Jones and MetLife
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and MetLife, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MetLife.
Diversification Opportunities for Dow Jones and MetLife
Almost no diversification
The 3 months correlation between Dow and MetLife is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and MetLife go up and down completely randomly.
Pair Corralation between Dow Jones and MetLife
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.87 times less return on investment than MetLife. But when comparing it to its historical volatility, Dow Jones Industrial is 2.13 times less risky than MetLife. It trades about 0.16 of its potential returns per unit of risk. MetLife is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,338 in MetLife on September 3, 2024 and sell it today you would earn a total of 1,979 from holding MetLife or generate 31.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.9% |
| Values | Daily Returns |
Dow Jones Industrial vs. MetLife
Performance |
| Timeline |
Dow Jones and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MetLife
Pair trading matchups for MetLife
Pair Trading with Dow Jones and MetLife
The main advantage of trading using opposite Dow Jones and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| MetLife vs. Ping An Insurance | MetLife vs. China Life Insurance | MetLife vs. Superior Plus Corp | MetLife vs. Origin Agritech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |