Correlation Between Metropolitan Steel and IGI Life
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel and IGI Life 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 Metropolitan Steel and IGI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Steel Corp and IGI Life Insurance, you can compare the effects of market volatilities on Metropolitan Steel and IGI Life 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 Metropolitan Steel with a short position of IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and IGI Life.
Diversification Opportunities for Metropolitan Steel and IGI Life
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and IGI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp and IGI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGI Life Insurance and Metropolitan Steel 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 Metropolitan Steel Corp are associated (or correlated) with IGI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGI Life Insurance has no effect on the direction of Metropolitan Steel i.e., Metropolitan Steel and IGI Life go up and down completely randomly.
Pair Corralation between Metropolitan Steel and IGI Life
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Steel Corp is 1.01 times less risky than IGI Life. The stock trades about -0.08 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,585 in IGI Life Insurance on October 31, 2024 and sell it today you would lose (85.00) from holding IGI Life Insurance or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. IGI Life Insurance
Performance |
| Timeline |
| Metropolitan Steel Corp |
| IGI Life Insurance |
Metropolitan Steel and IGI Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and IGI Life
The main advantage of trading using opposite Metropolitan Steel and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel position performs unexpectedly, IGI Life 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 IGI Life will offset losses from the drop in IGI Life's long position.| Metropolitan Steel vs. Pakistan Reinsurance | Metropolitan Steel vs. Agha Steel Industries | Metropolitan Steel vs. Adamjee Insurance | Metropolitan Steel vs. Murree Brewery |
| IGI Life vs. Fateh Sports Wear | IGI Life vs. EFU General Insurance | IGI Life vs. Jubilee Life Insurance | IGI Life vs. Supernet Technologie |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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