Correlation Between MetLife Preferred and Midwest Holding
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Midwest Holding 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 Midwest Holding 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 Midwest Holding, you can compare the effects of market volatilities on MetLife Preferred and Midwest Holding 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 Midwest Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Midwest Holding.
Diversification Opportunities for MetLife Preferred and Midwest Holding
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MetLife and Midwest is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Midwest Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midwest Holding 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 Midwest Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midwest Holding has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Midwest Holding go up and down completely randomly.
Pair Corralation between MetLife Preferred and Midwest Holding
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to generate 2.63 times more return on investment than Midwest Holding. However, MetLife Preferred is 2.63 times more volatile than Midwest Holding. It trades about 0.03 of its potential returns per unit of risk. Midwest Holding is currently generating about -0.12 per unit of risk. If you would invest 2,275 in MetLife Preferred Stock on August 28, 2024 and sell it today you would earn a total of 162.00 from holding MetLife Preferred Stock or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.24% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Midwest Holding
Performance |
| Timeline |
| MetLife Preferred Stock |
| Midwest Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MetLife Preferred and Midwest Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Midwest Holding
The main advantage of trading using opposite MetLife Preferred and Midwest Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Midwest Holding 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 Midwest Holding will offset losses from the drop in Midwest Holding's long position.| MetLife Preferred vs. Jackson Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial |
| Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. FG Annuities Life | Midwest Holding vs. CNO Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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