Correlation Between MetLife and AIA Group
Can any of the company-specific risk be diversified away by investing in both MetLife and AIA Group 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 AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and AIA Group Limited, you can compare the effects of market volatilities on MetLife and AIA Group 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 AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and AIA Group.
Diversification Opportunities for MetLife and AIA Group
Good diversification
The 3 months correlation between MetLife and AIA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and AIA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group Limited 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 AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group Limited has no effect on the direction of MetLife i.e., MetLife and AIA Group go up and down completely randomly.
Pair Corralation between MetLife and AIA Group
Assuming the 90 days horizon MetLife is expected to under-perform the AIA Group. But the stock apears to be less risky and, when comparing its historical volatility, MetLife is 2.72 times less risky than AIA Group. The stock trades about -0.09 of its potential returns per unit of risk. The AIA Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 665.00 in AIA Group Limited on November 28, 2024 and sell it today you would earn a total of 30.00 from holding AIA Group Limited or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MetLife vs. AIA Group Limited
Performance |
| Timeline |
| MetLife |
| AIA Group Limited |
MetLife and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and AIA Group
The main advantage of trading using opposite MetLife and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| MetLife vs. De Grey Mining | MetLife vs. Southwest Airlines Co | MetLife vs. Perseus Mining Limited | MetLife vs. Calibre Mining Corp |
| AIA Group vs. Chiba Bank | AIA Group vs. PT Bank Maybank | AIA Group vs. BioNTech SE | AIA Group vs. Allegheny Technologies Incorporated |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |