Correlation Between MetLife Preferred and Abacus Life
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Abacus Life 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 MetLife Preferred and Abacus Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife Preferred Stock and Abacus Life, you can compare the effects of market volatilities on MetLife Preferred and Abacus Life 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 MetLife Preferred with a short position of Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Abacus Life.
Diversification Opportunities for MetLife Preferred and Abacus Life
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MetLife and Abacus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life and MetLife Preferred 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 MetLife Preferred Stock are associated (or correlated) with Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Abacus Life go up and down completely randomly.
Pair Corralation between MetLife Preferred and Abacus Life
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 11.54 times less return on investment than Abacus Life. But when comparing it to its historical volatility, MetLife Preferred Stock is 10.33 times less risky than Abacus Life. It trades about 0.08 of its potential returns per unit of risk. Abacus Life is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 745.00 in Abacus Life on November 18, 2024 and sell it today you would earn a total of 22.00 from holding Abacus Life or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Abacus Life
Performance |
| Timeline |
| MetLife Preferred Stock |
| Abacus Life |
MetLife Preferred and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Abacus Life
The main advantage of trading using opposite MetLife Preferred and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.| MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial |
| Abacus Life vs. Drilling Tools International | Abacus Life vs. Major Drilling Group | Abacus Life vs. Eastman Chemical | Abacus Life vs. Luxfer Holdings PLC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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