Correlation Between Metropolitan Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and Dow Jones 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 Metropolitan Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Bank Trust and Dow Jones Industrial, you can compare the effects of market volatilities on Metropolitan Bank and Dow Jones 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 Metropolitan Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Dow Jones.
Diversification Opportunities for Metropolitan Bank and Dow Jones
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metropolitan and Dow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Trust and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Metropolitan Bank 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 Metropolitan Bank Trust are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and Dow Jones go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Dow Jones
Assuming the 90 days trading horizon Metropolitan Bank Trust is expected to under-perform the Dow Jones. In addition to that, Metropolitan Bank is 1.91 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of volatility. If you would invest 4,329,703 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 126,804 from holding Dow Jones Industrial or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Metropolitan Bank Trust vs. Dow Jones Industrial
Performance |
| Timeline |
Metropolitan Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Metropolitan Bank Trust
Pair trading matchups for Metropolitan Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Metropolitan Bank and Dow Jones
The main advantage of trading using opposite Metropolitan Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Metropolitan Bank vs. National Reinsurance | Metropolitan Bank vs. Cebu Air Preferred | Metropolitan Bank vs. Converge Information Communications | Metropolitan Bank vs. BDO Unibank |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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