Correlation Between MetLife Preferred and Sanlam
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Sanlam 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 Sanlam 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 Sanlam Ltd PK, you can compare the effects of market volatilities on MetLife Preferred and Sanlam 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 Sanlam. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Sanlam.
Diversification Opportunities for MetLife Preferred and Sanlam
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between MetLife and Sanlam is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Sanlam Ltd PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Ltd PK 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 Sanlam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Ltd PK has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Sanlam go up and down completely randomly.
Pair Corralation between MetLife Preferred and Sanlam
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to generate 0.38 times more return on investment than Sanlam. However, MetLife Preferred Stock is 2.61 times less risky than Sanlam. It trades about 0.01 of its potential returns per unit of risk. Sanlam Ltd PK is currently generating about -0.09 per unit of risk. If you would invest 2,450 in MetLife Preferred Stock on August 28, 2024 and sell it today you would earn a total of 3.00 from holding MetLife Preferred Stock or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Sanlam Ltd PK
Performance |
| Timeline |
| MetLife Preferred Stock |
| Sanlam Ltd PK |
MetLife Preferred and Sanlam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Sanlam
The main advantage of trading using opposite MetLife Preferred and Sanlam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Sanlam 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 Sanlam will offset losses from the drop in Sanlam's long position.| MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial |
| Sanlam vs. Ping An Insurance | Sanlam vs. CNO Financial Group | Sanlam vs. Genworth Financial | Sanlam 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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