Correlation Between MetLife and Celtic Plc

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

By analyzing existing cross correlation between MetLife and Celtic plc, you can compare the effects of market volatilities on MetLife and Celtic Plc 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 Celtic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Celtic Plc.

Diversification Opportunities for MetLife and Celtic Plc

-0.6

Correlation Coefficient

MetLife  Celtic Plc

Excellent diversification

The 3 months correlation between MetLife and Celtic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc 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 Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of MetLife i.e., MetLife and Celtic Plc go up and down completely randomly.

Pair Corralation between MetLife and Celtic Plc

Considering the 90-day investment horizon MetLife is expected to generate 0.41 times more return on investment than Celtic Plc. However, MetLife is 2.45 times less risky than Celtic Plc. It trades about 0.11 of its potential returns per unit of risk. Celtic plc is currently generating about -0.08 per unit of risk. If you would invest  7,698  in MetLife on September 4, 2024 and sell it today you would earn a total of  874.00  from holding MetLife or generate 11.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MetLife  vs.  Celtic plc

MetLife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Celtic plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celtic plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MetLife and Celtic Plc

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

The idea behind MetLife and Celtic plc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.