Correlation Between International Business and MetLife
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and MetLife, you can compare the effects of market volatilities on International Business 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 International Business with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and MetLife.
Diversification Opportunities for International Business and MetLife
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and MetLife is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and International Business 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 International Business Machines 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 International Business i.e., International Business and MetLife go up and down completely randomly.
Pair Corralation between International Business and MetLife
Considering the 90-day investment horizon International Business Machines is expected to generate 1.07 times more return on investment than MetLife. However, International Business is 1.07 times more volatile than MetLife. It trades about 0.11 of its potential returns per unit of risk. MetLife is currently generating about 0.1 per unit of risk. If you would invest 15,781 in International Business Machines on September 4, 2024 and sell it today you would earn a total of 7,119 from holding International Business Machines or generate 45.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. MetLife
Performance |
| Timeline |
| International Business |
| MetLife |
International Business and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and MetLife
The main advantage of trading using opposite International Business and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings |
| MetLife vs. Aflac Incorporated | MetLife vs. Manulife Financial Corp | MetLife vs. Jackson Financial | MetLife vs. Globe Life |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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