Correlation Between MetLife and 48126BAA1

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Can any of the company-specific risk be diversified away by investing in both MetLife and 48126BAA1 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 48126BAA1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and JP Morgan Chase, you can compare the effects of market volatilities on MetLife and 48126BAA1 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 48126BAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and 48126BAA1.

Diversification Opportunities for MetLife and 48126BAA1

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MetLife and 48126BAA1 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase 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 48126BAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of MetLife i.e., MetLife and 48126BAA1 go up and down completely randomly.

Pair Corralation between MetLife and 48126BAA1

Considering the 90-day investment horizon MetLife is expected to generate 1.51 times more return on investment than 48126BAA1. However, MetLife is 1.51 times more volatile than JP Morgan Chase. It trades about 0.24 of its potential returns per unit of risk. JP Morgan Chase is currently generating about -0.06 per unit of risk. If you would invest  7,801  in MetLife on September 5, 2024 and sell it today you would earn a total of  737.00  from holding MetLife or generate 9.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

MetLife  vs.  JP Morgan Chase

 Performance 
       Timeline  
MetLife 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JP Morgan Chase 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 48126BAA1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MetLife and 48126BAA1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MetLife and 48126BAA1

The main advantage of trading using opposite MetLife and 48126BAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, 48126BAA1 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 48126BAA1 will offset losses from the drop in 48126BAA1's long position.
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The idea behind MetLife and JP Morgan Chase 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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48126BAA1 vs. MetLife
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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