Correlation Between MetLife Preferred and Globe Life
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Globe 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 Globe 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 Globe Life, you can compare the effects of market volatilities on MetLife Preferred and Globe 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 Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Globe Life.
Diversification Opportunities for MetLife Preferred and Globe Life
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MetLife and Globe is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe 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 Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Globe Life go up and down completely randomly.
Pair Corralation between MetLife Preferred and Globe Life
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 1.41 times less return on investment than Globe Life. But when comparing it to its historical volatility, MetLife Preferred Stock is 6.84 times less risky than Globe Life. It trades about 0.1 of its potential returns per unit of risk. Globe Life is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,918 in Globe Life on August 24, 2024 and sell it today you would lose (1,019) from holding Globe Life or give up 8.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Globe Life
Performance |
| Timeline |
| MetLife Preferred Stock |
| Globe Life |
MetLife Preferred and Globe Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Globe Life
The main advantage of trading using opposite MetLife Preferred and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Globe 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 Globe Life will offset losses from the drop in Globe 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 |
| Globe Life vs. Prudential Public Limited | Globe Life vs. CNO Financial Group | Globe Life vs. MetLife Preferred Stock | Globe Life vs. MetLife |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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