Correlation Between MetLife Preferred and CNO Financial
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and CNO Financial 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 CNO Financial 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 CNO Financial Group, you can compare the effects of market volatilities on MetLife Preferred and CNO Financial 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 CNO Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and CNO Financial.
Diversification Opportunities for MetLife Preferred and CNO Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MetLife and CNO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group 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 CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and CNO Financial go up and down completely randomly.
Pair Corralation between MetLife Preferred and CNO Financial
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to under-perform the CNO Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, MetLife Preferred Stock is 2.63 times less risky than CNO Financial. The preferred stock trades about -0.18 of its potential returns per unit of risk. The CNO Financial Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,475 in CNO Financial Group on August 28, 2024 and sell it today you would earn a total of 558.00 from holding CNO Financial Group or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. CNO Financial Group
Performance |
| Timeline |
| MetLife Preferred Stock |
| CNO Financial Group |
MetLife Preferred and CNO Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and CNO Financial
The main advantage of trading using opposite MetLife Preferred and CNO Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, CNO Financial 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 CNO Financial will offset losses from the drop in CNO Financial's long position.The idea behind MetLife Preferred Stock and CNO Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CNO Financial vs. MetLife Preferred Stock | CNO Financial vs. FG Annuities Life | CNO Financial vs. Prudential Public Limited | CNO Financial 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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