Correlation Between US Physical and MetLife
Can any of the company-specific risk be diversified away by investing in both US Physical 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 US Physical and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Physical Therapy and MetLife, you can compare the effects of market volatilities on US Physical 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 US Physical with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physical and MetLife.
Diversification Opportunities for US Physical and MetLife
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UPH and MetLife is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and US Physical 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 US Physical Therapy 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 US Physical i.e., US Physical and MetLife go up and down completely randomly.
Pair Corralation between US Physical and MetLife
Assuming the 90 days horizon US Physical Therapy is expected to under-perform the MetLife. But the stock apears to be less risky and, when comparing its historical volatility, US Physical Therapy is 1.34 times less risky than MetLife. The stock trades about -0.14 of its potential returns per unit of risk. The MetLife is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7,860 in MetLife on October 25, 2024 and sell it today you would earn a total of 358.00 from holding MetLife or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
US Physical Therapy vs. MetLife
Performance |
| Timeline |
| US Physical Therapy |
| MetLife |
US Physical and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Physical and MetLife
The main advantage of trading using opposite US Physical and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical 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.| US Physical vs. Fresenius Medical Care | US Physical vs. Chemed | US Physical vs. Superior Plus Corp | US Physical vs. Origin Agritech |
| MetLife vs. Pure Storage | MetLife vs. NTT DATA | MetLife vs. INTER CARS SA | MetLife vs. DATADOT TECHNOLOGY |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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