Correlation Between MetLife Preferred and Pekin Life
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Pekin 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 Pekin 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 Pekin Life Insurance, you can compare the effects of market volatilities on MetLife Preferred and Pekin 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 Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Pekin Life.
Diversification Opportunities for MetLife Preferred and Pekin Life
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetLife and Pekin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Pekin Life go up and down completely randomly.
Pair Corralation between MetLife Preferred and Pekin Life
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to generate 2.67 times more return on investment than Pekin Life. However, MetLife Preferred is 2.67 times more volatile than Pekin Life Insurance. It trades about 0.1 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.04 per unit of risk. If you would invest 2,194 in MetLife Preferred Stock on November 3, 2024 and sell it today you would earn a total of 312.00 from holding MetLife Preferred Stock or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Pekin Life Insurance
Performance |
| Timeline |
| MetLife Preferred Stock |
| Pekin Life Insurance |
MetLife Preferred and Pekin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Pekin Life
The main advantage of trading using opposite MetLife Preferred and Pekin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Pekin 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 Pekin Life will offset losses from the drop in Pekin 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 |
| Pekin Life vs. FG Annuities Life | Pekin Life vs. MetLife Preferred Stock | Pekin Life vs. Brighthouse Financial | Pekin Life vs. MetLife Preferred Stock |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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