Correlation Between MetLife and Reliq Health

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

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

Diversification Opportunities for MetLife and Reliq Health

-0.74

Correlation Coefficient

MetLife  Reliq Health

Pay attention - limited upside

The 3 months correlation between MetLife and Reliq is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Reliq Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliq Health Technologies 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 Reliq Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliq Health Technologies has no effect on the direction of MetLife i.e., MetLife and Reliq Health go up and down completely randomly.

Pair Corralation between MetLife and Reliq Health

Considering the 90-day investment horizon MetLife is expected to generate 103.63 times less return on investment than Reliq Health. But when comparing it to its historical volatility, MetLife is 82.74 times less risky than Reliq Health. It trades about 0.13 of its potential returns per unit of risk. Reliq Health Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Reliq Health Technologies on September 4, 2024 and sell it today you would lose (3.89) from holding Reliq Health Technologies or give up 97.25% of portfolio value over 90 days.

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

MetLife  vs.  Reliq Health Technologies

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.

Reliq Health Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reliq Health Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Reliq Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetLife and Reliq Health

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

The idea behind MetLife and Reliq Health Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.