Correlation Between MetLife Preferred and Dow Jones
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on MetLife Preferred and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Dow Jones.
Diversification Opportunities for MetLife Preferred and Dow Jones
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MetLife and Dow is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Dow Jones go up and down completely randomly.
Pair Corralation between MetLife Preferred and Dow Jones
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 1.51 times less return on investment than Dow Jones. In addition to that, MetLife Preferred is 1.42 times more volatile than Dow Jones Industrial. It trades about 0.15 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 per unit of volatility. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Dow Jones Industrial
Performance |
| Timeline |
MetLife Preferred and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
MetLife Preferred Stock
Pair trading matchups for MetLife Preferred
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with MetLife Preferred and Dow Jones
The main advantage of trading using opposite MetLife Preferred and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| MetLife Preferred vs. Jackson Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets |