Correlation Between MetLife Preferred and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Aflac Incorporated 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 Aflac Incorporated 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 Aflac Incorporated, you can compare the effects of market volatilities on MetLife Preferred and Aflac Incorporated 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 Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Aflac Incorporated.
Diversification Opportunities for MetLife Preferred and Aflac Incorporated
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MetLife and Aflac is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated 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 Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Aflac Incorporated go up and down completely randomly.
Pair Corralation between MetLife Preferred and Aflac Incorporated
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to under-perform the Aflac Incorporated. But the preferred stock apears to be less risky and, when comparing its historical volatility, MetLife Preferred Stock is 4.5 times less risky than Aflac Incorporated. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Aflac Incorporated is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 10,236 in Aflac Incorporated on November 3, 2024 and sell it today you would earn a total of 516.00 from holding Aflac Incorporated or generate 5.04% 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. Aflac Incorporated
Performance |
| Timeline |
| MetLife Preferred Stock |
| Aflac Incorporated |
MetLife Preferred and Aflac Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Aflac Incorporated
The main advantage of trading using opposite MetLife Preferred and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.| MetLife Preferred vs. Assurant | MetLife Preferred vs. Affiliated Managers Group, | MetLife Preferred vs. The Carlyle Group | MetLife Preferred vs. Affiliated Managers Group, |
| Aflac Incorporated vs. Prudential Financial | Aflac Incorporated vs. Lincoln National | Aflac Incorporated vs. Brighthouse Financial | Aflac Incorporated vs. Unum 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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