Correlation Between OppFi and MetLife
Can any of the company-specific risk be diversified away by investing in both OppFi and MetLife 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 OppFi and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and MetLife, you can compare the effects of market volatilities on OppFi and MetLife 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 OppFi with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and MetLife.
Diversification Opportunities for OppFi and MetLife
Poor diversification
The 3 months correlation between OppFi and MetLife is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and OppFi 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 OppFi Inc are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of OppFi i.e., OppFi and MetLife go up and down completely randomly.
Pair Corralation between OppFi and MetLife
Given the investment horizon of 90 days OppFi Inc is expected to generate 2.75 times more return on investment than MetLife. However, OppFi is 2.75 times more volatile than MetLife. It trades about 0.08 of its potential returns per unit of risk. MetLife is currently generating about 0.04 per unit of risk. If you would invest 225.00 in OppFi Inc on September 3, 2024 and sell it today you would earn a total of 591.00 from holding OppFi Inc or generate 262.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OppFi Inc vs. MetLife
Performance |
| Timeline |
| OppFi Inc |
| MetLife |
OppFi and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and MetLife
The main advantage of trading using opposite OppFi and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.| OppFi vs. Highway Holdings Limited | OppFi vs. QCR Holdings | OppFi vs. Partner Communications | OppFi vs. Acumen Pharmaceuticals |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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