Correlation Between MetLife Preferred and Cigna Corp
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Cigna Corp 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 Cigna Corp 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 Cigna Corp, you can compare the effects of market volatilities on MetLife Preferred and Cigna Corp 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 Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Cigna Corp.
Diversification Opportunities for MetLife Preferred and Cigna Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MetLife and Cigna is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp 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 Cigna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna Corp has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Cigna Corp go up and down completely randomly.
Pair Corralation between MetLife Preferred and Cigna Corp
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to generate 0.5 times more return on investment than Cigna Corp. However, MetLife Preferred Stock is 1.99 times less risky than Cigna Corp. It trades about 0.03 of its potential returns per unit of risk. Cigna Corp is currently generating about -0.08 per unit of risk. If you would invest 2,077 in MetLife Preferred Stock on November 27, 2024 and sell it today you would earn a total of 28.00 from holding MetLife Preferred Stock or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Cigna Corp
Performance |
| Timeline |
| MetLife Preferred Stock |
| Cigna Corp |
MetLife Preferred and Cigna Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Cigna Corp
The main advantage of trading using opposite MetLife Preferred and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Cigna Corp 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 Cigna Corp will offset losses from the drop in Cigna Corp's long position.| MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. The Allstate | MetLife Preferred vs. The Allstate | MetLife Preferred vs. Wells Fargo |
| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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