Correlation Between MetLife Preferred and Genworth Financial
Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Genworth 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 Genworth 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 Genworth Financial, you can compare the effects of market volatilities on MetLife Preferred and Genworth 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 Genworth Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Genworth Financial.
Diversification Opportunities for MetLife Preferred and Genworth Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MetLife and Genworth is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Genworth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genworth Financial 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 Genworth Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genworth Financial has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Genworth Financial go up and down completely randomly.
Pair Corralation between MetLife Preferred and Genworth Financial
Assuming the 90 days trading horizon MetLife Preferred is expected to generate 14.63 times less return on investment than Genworth Financial. But when comparing it to its historical volatility, MetLife Preferred Stock is 1.99 times less risky than Genworth Financial. It trades about 0.01 of its potential returns per unit of risk. Genworth Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 615.00 in Genworth Financial on August 27, 2024 and sell it today you would earn a total of 162.00 from holding Genworth Financial or generate 26.34% 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. Genworth Financial
Performance |
| Timeline |
| MetLife Preferred Stock |
| Genworth Financial |
MetLife Preferred and Genworth Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife Preferred and Genworth Financial
The main advantage of trading using opposite MetLife Preferred and Genworth Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Genworth 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 Genworth Financial will offset losses from the drop in Genworth Financial's long position.| MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Morgan Stanley |
| Genworth Financial vs. Morningstar Unconstrained Allocation | Genworth Financial vs. Via Renewables | Genworth Financial vs. Sitka Gold Corp | Genworth Financial vs. MSCI ACWI exAUCONSUMER |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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