Correlation Between MetLife Preferred and First Horizon
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and First Horizon 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 First Horizon 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 First Horizon, you can compare the effects of market volatilities on MetLife Preferred and First Horizon 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 First Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and First Horizon.
Diversification Opportunities for MetLife Preferred and First Horizon
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between MetLife and First is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and First Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and First Horizon go up and down completely randomly.
Pair Corralation between MetLife Preferred and First Horizon
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 3.7 times less return on investment than First Horizon. In addition to that, MetLife Preferred is 1.36 times more volatile than First Horizon. It trades about 0.02 of its total potential returns per unit of risk. First Horizon is currently generating about 0.09 per unit of volatility. If you would invest 2,285 in First Horizon on September 1, 2024 and sell it today you would earn a total of 217.00 from holding First Horizon or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife Preferred Stock vs. First Horizon
Performance |
| Timeline |
| MetLife Preferred Stock |
| First Horizon |
MetLife Preferred and First Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and First Horizon
The main advantage of trading using opposite MetLife Preferred and First Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, First Horizon 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 First Horizon will offset losses from the drop in First Horizon's long position.| MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. The Allstate | MetLife Preferred vs. The Allstate | MetLife Preferred vs. Wells Fargo |
| First Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. Customers Bancorp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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