Correlation Between MetLife Preferred and National Western
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and National Western 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 National Western 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 National Western Life, you can compare the effects of market volatilities on MetLife Preferred and National Western 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 National Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and National Western.
Diversification Opportunities for MetLife Preferred and National Western
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MetLife and National is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and National Western Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Western 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 National Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Western Life has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and National Western go up and down completely randomly.
Pair Corralation between MetLife Preferred and National Western
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 3.5 times less return on investment than National Western. But when comparing it to its historical volatility, MetLife Preferred Stock is 1.77 times less risky than National Western. It trades about 0.03 of its potential returns per unit of risk. National Western Life is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 41,866 in National Western Life on August 28, 2024 and sell it today you would earn a total of 8,132 from holding National Western Life or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 72.03% |
| Values | Daily Returns |
MetLife Preferred Stock vs. National Western Life
Performance |
| Timeline |
| MetLife Preferred Stock |
| National Western Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MetLife Preferred and National Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and National Western
The main advantage of trading using opposite MetLife Preferred and National Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, National Western 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 National Western will offset losses from the drop in National Western's long position.| MetLife Preferred vs. Jackson Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial |
| National Western vs. MetLife Preferred Stock | National Western vs. Prudential Public Limited | National Western vs. CNO Financial Group | National Western vs. FG Annuities Life |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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