Correlation Between MetLife and JEFFERIES

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

Diversification Opportunities for MetLife and JEFFERIES

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between MetLife and JEFFERIES is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and JEFFERIES GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEFFERIES GROUP 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 JEFFERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEFFERIES GROUP INC has no effect on the direction of MetLife i.e., MetLife and JEFFERIES go up and down completely randomly.

Pair Corralation between MetLife and JEFFERIES

Considering the 90-day investment horizon MetLife is expected to generate 1.54 times more return on investment than JEFFERIES. However, MetLife is 1.54 times more volatile than JEFFERIES GROUP INC. It trades about 0.36 of its potential returns per unit of risk. JEFFERIES GROUP INC is currently generating about -0.04 per unit of risk. If you would invest  7,801  in MetLife on September 3, 2024 and sell it today you would earn a total of  1,022  from holding MetLife or generate 13.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy85.0%
ValuesDaily Returns

MetLife  vs.  JEFFERIES GROUP INC

 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.
JEFFERIES GROUP INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JEFFERIES GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JEFFERIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MetLife and JEFFERIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MetLife and JEFFERIES

The main advantage of trading using opposite MetLife and JEFFERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, JEFFERIES 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 JEFFERIES will offset losses from the drop in JEFFERIES's long position.
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The idea behind MetLife and JEFFERIES GROUP INC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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