Correlation Between MetLife and AIA Group
Can any of the company-specific risk be diversified away by investing in both MetLife and AIA Group 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 and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and AIA Group, you can compare the effects of market volatilities on MetLife and AIA Group 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 with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and AIA Group.
Diversification Opportunities for MetLife and AIA Group
Poor diversification
The 3 months correlation between MetLife and AIA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and AIA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and MetLife 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 are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of MetLife i.e., MetLife and AIA Group go up and down completely randomly.
Pair Corralation between MetLife and AIA Group
Considering the 90-day investment horizon MetLife is expected to generate 0.59 times more return on investment than AIA Group. However, MetLife is 1.71 times less risky than AIA Group. It trades about 0.04 of its potential returns per unit of risk. AIA Group is currently generating about -0.01 per unit of risk. If you would invest 6,993 in MetLife on August 28, 2024 and sell it today you would earn a total of 1,741 from holding MetLife or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. AIA Group
Performance |
| Timeline |
| MetLife |
| AIA Group |
MetLife and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and AIA Group
The main advantage of trading using opposite MetLife and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| MetLife vs. Morningstar Unconstrained Allocation | MetLife vs. Via Renewables | MetLife vs. Sitka Gold Corp | MetLife vs. MSCI ACWI exAUCONSUMER |
| AIA Group vs. CNO Financial Group | AIA Group vs. Genworth Financial | AIA Group vs. MetLife Preferred Stock | AIA Group vs. Prudential Public Limited |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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