Correlation Between Unum and MetLife
Can any of the company-specific risk be diversified away by investing in both Unum 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 Unum and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and MetLife, you can compare the effects of market volatilities on Unum 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 Unum with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and MetLife.
Diversification Opportunities for Unum and MetLife
Poor diversification
The 3 months correlation between Unum and MetLife is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Unum 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 Unum Group 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 Unum i.e., Unum and MetLife go up and down completely randomly.
Pair Corralation between Unum and MetLife
Considering the 90-day investment horizon Unum Group is expected to generate 1.0 times more return on investment than MetLife. However, Unum is 1.0 times more volatile than MetLife. It trades about 0.39 of its potential returns per unit of risk. MetLife is currently generating about 0.08 per unit of risk. If you would invest 6,301 in Unum Group on August 24, 2024 and sell it today you would earn a total of 1,315 from holding Unum Group or generate 20.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unum Group vs. MetLife
Performance |
| Timeline |
| Unum Group |
| MetLife |
Unum and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unum and MetLife
The main advantage of trading using opposite Unum and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum 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.| Unum vs. Manulife Financial Corp | Unum vs. Brighthouse Financial | Unum vs. FG Annuities Life | Unum vs. Jackson Financial |
| MetLife vs. Manulife Financial Corp | MetLife vs. Brighthouse Financial | MetLife vs. FG Annuities Life | MetLife vs. Jackson 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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