Correlation Between MetLife and 126307AY3

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Can any of the company-specific risk be diversified away by investing in both MetLife and 126307AY3 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 126307AY3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and CSC Holdings 75, you can compare the effects of market volatilities on MetLife and 126307AY3 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 126307AY3. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and 126307AY3.

Diversification Opportunities for MetLife and 126307AY3

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between MetLife and 126307AY3 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and CSC Holdings 75 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Holdings 75 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 126307AY3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Holdings 75 has no effect on the direction of MetLife i.e., MetLife and 126307AY3 go up and down completely randomly.

Pair Corralation between MetLife and 126307AY3

Considering the 90-day investment horizon MetLife is expected to generate 32.04 times less return on investment than 126307AY3. But when comparing it to its historical volatility, MetLife is 30.54 times less risky than 126307AY3. It trades about 0.04 of its potential returns per unit of risk. CSC Holdings 75 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,400  in CSC Holdings 75 on September 3, 2024 and sell it today you would lose (1,005) from holding CSC Holdings 75 or give up 13.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy93.13%
ValuesDaily Returns

MetLife  vs.  CSC Holdings 75

 Performance 
       Timeline  
MetLife 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, MetLife unveiled solid returns over the last few months and may actually be approaching a breakup point.
CSC Holdings 75 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CSC Holdings 75 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 126307AY3 sustained solid returns over the last few months and may actually be approaching a breakup point.

MetLife and 126307AY3 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MetLife and 126307AY3

The main advantage of trading using opposite MetLife and 126307AY3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, 126307AY3 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 126307AY3 will offset losses from the drop in 126307AY3's long position.
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The idea behind MetLife and CSC Holdings 75 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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