Correlation Between MetLife Preferred and Primerica

Can any of the company-specific risk be diversified away by investing in both MetLife Preferred and Primerica 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 MetLife Preferred and Primerica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MetLife Preferred Stock and Primerica, you can compare the effects of market volatilities on MetLife Preferred and Primerica 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 MetLife Preferred with a short position of Primerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife Preferred and Primerica.

Diversification Opportunities for MetLife Preferred and Primerica

-0.63

Correlation Coefficient

MetLife Preferred  Primerica

Excellent diversification

The 3 months correlation between MetLife and Primerica is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Primerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primerica and MetLife Preferred 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 MetLife Preferred Stock are associated (or correlated) with Primerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primerica has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Primerica go up and down completely randomly.

Pair Corralation between MetLife Preferred and Primerica

Assuming the 90 days trading horizon MetLife Preferred Stock is expected to under-perform the Primerica. But the preferred stock apears to be less risky and, when comparing its historical volatility, MetLife Preferred Stock is 2.33 times less risky than Primerica. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Primerica is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  26,243  in Primerica on August 30, 2024 and sell it today you would earn a total of  4,184  from holding Primerica or generate 15.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

MetLife Preferred Stock  vs.  Primerica

MetLife Preferred Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetLife Preferred Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MetLife Preferred is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Primerica

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Primerica demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetLife Preferred and Primerica

The main advantage of trading using opposite MetLife Preferred and Primerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife Preferred position performs unexpectedly, Primerica 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 Primerica will offset losses from the drop in Primerica's long position.

The idea behind MetLife Preferred Stock and Primerica pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.