Correlation Between Midwest Holding and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both Midwest Holding 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 Midwest Holding and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midwest Holding and MetLife Preferred Stock, you can compare the effects of market volatilities on Midwest Holding 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 Midwest Holding with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midwest Holding and MetLife Preferred.
Diversification Opportunities for Midwest Holding and MetLife Preferred
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Midwest and MetLife is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Midwest Holding 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 Midwest Holding 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 Midwest Holding 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 Midwest Holding i.e., Midwest Holding and MetLife Preferred go up and down completely randomly.
Pair Corralation between Midwest Holding and MetLife Preferred
Given the investment horizon of 90 days Midwest Holding is expected to under-perform the MetLife Preferred. But the stock apears to be less risky and, when comparing its historical volatility, Midwest Holding is 3.14 times less risky than MetLife Preferred. The stock trades about -0.12 of its potential returns per unit of risk. The MetLife Preferred Stock is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,960 in MetLife Preferred Stock on August 28, 2024 and sell it today you would earn a total of 173.00 from holding MetLife Preferred Stock or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.24% |
| Values | Daily Returns |
Midwest Holding vs. MetLife Preferred Stock
Performance |
| Timeline |
| Midwest Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MetLife Preferred Stock |
Midwest Holding and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midwest Holding and MetLife Preferred
The main advantage of trading using opposite Midwest Holding and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midwest Holding 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.| Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. FG Annuities Life | Midwest Holding vs. CNO Financial Group |
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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