Correlation Between Sanlam and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both Sanlam 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 Sanlam and MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanlam Ltd PK and MetLife Preferred Stock, you can compare the effects of market volatilities on Sanlam 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 Sanlam with a short position of MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanlam and MetLife Preferred.
Diversification Opportunities for Sanlam and MetLife Preferred
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sanlam and MetLife is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Ltd PK 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 Sanlam 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 Sanlam Ltd PK 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 Sanlam i.e., Sanlam and MetLife Preferred go up and down completely randomly.
Pair Corralation between Sanlam and MetLife Preferred
Assuming the 90 days horizon Sanlam Ltd PK is expected to under-perform the MetLife Preferred. In addition to that, Sanlam is 3.81 times more volatile than MetLife Preferred Stock. It trades about -0.06 of its total potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.12 per unit of volatility. If you would invest 2,423 in MetLife Preferred Stock on October 22, 2024 and sell it today you would earn a total of 89.00 from holding MetLife Preferred Stock or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanlam Ltd PK vs. MetLife Preferred Stock
Performance |
| Timeline |
| Sanlam Ltd PK |
| MetLife Preferred Stock |
Sanlam and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanlam and MetLife Preferred
The main advantage of trading using opposite Sanlam and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanlam 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.| Sanlam vs. Ping An Insurance | Sanlam vs. CNO Financial Group | Sanlam vs. Genworth Financial | Sanlam vs. MetLife Preferred Stock |
| MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. Brighthouse Financial | MetLife Preferred vs. MetLife Preferred Stock | 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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