Correlation Between FG Annuities and MetLife Preferred

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Can any of the company-specific risk be diversified away by investing in both FG Annuities 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 FG Annuities and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FG Annuities Life and MetLife Preferred Stock, you can compare the effects of market volatilities on FG Annuities 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 FG Annuities with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Annuities and MetLife Preferred.

Diversification Opportunities for FG Annuities and MetLife Preferred

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between FG Annuities and MetLife is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life 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 FG Annuities 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 FG Annuities Life 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 FG Annuities i.e., FG Annuities and MetLife Preferred go up and down completely randomly.

Pair Corralation between FG Annuities and MetLife Preferred

Allowing for the 90-day total investment horizon FG Annuities Life is expected to generate 3.74 times more return on investment than MetLife Preferred. However, FG Annuities is 3.74 times more volatile than MetLife Preferred Stock. It trades about 0.09 of its potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.03 per unit of risk. If you would invest  2,311  in FG Annuities Life on August 28, 2024 and sell it today you would earn a total of  2,532  from holding FG Annuities Life or generate 109.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FG Annuities Life  vs.  MetLife Preferred Stock

 Performance 
       Timeline  
FG Annuities Life 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, FG Annuities reported solid returns over the last few months and may actually be approaching a breakup point.
MetLife Preferred Stock 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MetLife Preferred Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MetLife Preferred is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FG Annuities and MetLife Preferred Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FG Annuities and MetLife Preferred

The main advantage of trading using opposite FG Annuities and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Annuities 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.
The idea behind FG Annuities Life and MetLife Preferred Stock 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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