Correlation Between MetLife and Astronics Corp

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

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

Diversification Opportunities for MetLife and Astronics Corp

-0.41

Correlation Coefficient

MetLife  Astronics Corp

Very good diversification

The 3 months correlation between MetLife and Astronics is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Astronics Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics Corp Cl and MetLife 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 are associated (or correlated) with Astronics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics Corp Cl has no effect on the direction of MetLife i.e., MetLife and Astronics Corp go up and down completely randomly.

Pair Corralation between MetLife and Astronics Corp

Considering the 90-day investment horizon MetLife is expected to generate 3.73 times less return on investment than Astronics Corp. But when comparing it to its historical volatility, MetLife is 3.0 times less risky than Astronics Corp. It trades about 0.04 of its potential returns per unit of risk. Astronics Corp Cl is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Astronics Corp Cl on September 5, 2024 and sell it today you would earn a total of  621.00  from holding Astronics Corp Cl or generate 64.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.42%
Values	Daily Returns

MetLife  vs.  Astronics Corp Cl

MetLife

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MetLife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Astronics Corp Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics Corp Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MetLife and Astronics Corp

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

The idea behind MetLife and Astronics Corp Cl 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..