Correlation Between MetLife and Enbridge
Can any of the company-specific risk be diversified away by investing in both MetLife and Enbridge 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 Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Enbridge, you can compare the effects of market volatilities on MetLife and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Enbridge.
Diversification Opportunities for MetLife and Enbridge
Very poor diversification
The 3 months correlation between MetLife and Enbridge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of MetLife i.e., MetLife and Enbridge go up and down completely randomly.
Pair Corralation between MetLife and Enbridge
Considering the 90-day investment horizon MetLife is expected to generate 2.33 times more return on investment than Enbridge. However, MetLife is 2.33 times more volatile than Enbridge. It trades about 0.06 of its potential returns per unit of risk. Enbridge is currently generating about 0.05 per unit of risk. If you would invest 8,242 in MetLife on September 5, 2024 and sell it today you would earn a total of 330.00 from holding MetLife or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. Enbridge
Performance |
| Timeline |
| MetLife |
| Enbridge |
MetLife and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and Enbridge
The main advantage of trading using opposite MetLife and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| MetLife vs. Aflac Incorporated | MetLife vs. Manulife Financial Corp | MetLife vs. Jackson Financial | MetLife vs. CNO Financial Group |
| Enbridge vs. GasLog Partners LP | Enbridge vs. GasLog Partners LP | Enbridge vs. NGL Energy Partners | Enbridge vs. Seapeak LLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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