Correlation Between MetLife and ATT
Can any of the company-specific risk be diversified away by investing in both MetLife and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and ATT Inc, you can compare the effects of market volatilities on MetLife and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and ATT.
Diversification Opportunities for MetLife and ATT
Poor diversification
The 3 months correlation between MetLife and ATT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of MetLife i.e., MetLife and ATT go up and down completely randomly.
Pair Corralation between MetLife and ATT
Considering the 90-day investment horizon MetLife is expected to generate 1.42 times less return on investment than ATT. In addition to that, MetLife is 1.17 times more volatile than ATT Inc. It trades about 0.12 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.19 per unit of volatility. If you would invest 1,653 in ATT Inc on September 3, 2024 and sell it today you would earn a total of 663.00 from holding ATT Inc or generate 40.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. ATT Inc
Performance |
| Timeline |
| MetLife |
| ATT Inc |
MetLife and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and ATT
The main advantage of trading using opposite MetLife and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
| ATT vs. Highway Holdings Limited | ATT vs. QCR Holdings | ATT vs. Partner Communications | ATT vs. Acumen Pharmaceuticals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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