Correlation Between Primerica and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both Primerica and MetLife Preferred 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 Primerica and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primerica and MetLife Preferred Stock, you can compare the effects of market volatilities on Primerica and MetLife Preferred 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 Primerica with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primerica and MetLife Preferred.
Diversification Opportunities for Primerica and MetLife Preferred
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Primerica and MetLife is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Primerica and MetLife Preferred Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife Preferred Stock and Primerica 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 Primerica are associated (or correlated) with MetLife Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife Preferred Stock has no effect on the direction of Primerica i.e., Primerica and MetLife Preferred go up and down completely randomly.
Pair Corralation between Primerica and MetLife Preferred
Considering the 90-day investment horizon Primerica is expected to generate 2.44 times more return on investment than MetLife Preferred. However, Primerica is 2.44 times more volatile than MetLife Preferred Stock. It trades about 0.25 of its potential returns per unit of risk. MetLife Preferred Stock is currently generating about -0.09 per unit of risk. If you would invest 26,434 in Primerica on August 30, 2024 and sell it today you would earn a total of 3,993 from holding Primerica or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primerica vs. MetLife Preferred Stock
Performance |
| Timeline |
| Primerica |
| MetLife Preferred Stock |
Primerica and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primerica and MetLife Preferred
The main advantage of trading using opposite Primerica and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primerica position performs unexpectedly, MetLife Preferred 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 Preferred will offset losses from the drop in MetLife Preferred's long position.| Primerica vs. CNO Financial Group | Primerica vs. Aflac Incorporated | Primerica vs. Prudential Public Limited | Primerica vs. FG Annuities Life |
| MetLife Preferred vs. Jackson Financial | MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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