Correlation Between MetLife Preferred and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Equitable Holdings 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 Equitable Holdings 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 Equitable Holdings, you can compare the effects of market volatilities on MetLife Preferred and Equitable Holdings 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Equitable Holdings.
Diversification Opportunities for MetLife Preferred and Equitable Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetLife and Equitable is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Equitable Holdings go up and down completely randomly.
Pair Corralation between MetLife Preferred and Equitable Holdings
Assuming the 90 days trading horizon MetLife Preferred Stock is expected to under-perform the Equitable Holdings. But the preferred stock apears to be less risky and, when comparing its historical volatility, MetLife Preferred Stock is 1.02 times less risky than Equitable Holdings. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Equitable Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,878 in Equitable Holdings on October 26, 2024 and sell it today you would lose (36.00) from holding Equitable Holdings or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. Equitable Holdings
Performance |
| Timeline |
| MetLife Preferred Stock |
| Equitable Holdings |
MetLife Preferred and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Equitable Holdings
The main advantage of trading using opposite MetLife Preferred and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. The Allstate | MetLife Preferred vs. The Allstate | MetLife Preferred vs. Wells Fargo |
| Equitable Holdings vs. Equitable Holdings | Equitable Holdings vs. Athene Holding | Equitable Holdings vs. MetLife Preferred Stock | Equitable Holdings vs. Bank of America |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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