Correlation Between MetLife and 00440EAQ0

Can any of the company-specific risk be diversified away by investing in both MetLife and 00440EAQ0 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 00440EAQ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MetLife and ACE INA HLDGS, you can compare the effects of market volatilities on MetLife and 00440EAQ0 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 00440EAQ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and 00440EAQ0.

Diversification Opportunities for MetLife and 00440EAQ0

0.23

Correlation Coefficient

MetLife  00440EAQ0

Modest diversification

The 3 months correlation between MetLife and 00440EAQ0 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and ACE INA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACE INA HLDGS 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 00440EAQ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACE INA HLDGS has no effect on the direction of MetLife i.e., MetLife and 00440EAQ0 go up and down completely randomly.

Pair Corralation between MetLife and 00440EAQ0

Considering the 90-day investment horizon MetLife is expected to generate 1.92 times more return on investment than 00440EAQ0. However, MetLife is 1.92 times more volatile than ACE INA HLDGS. It trades about 0.11 of its potential returns per unit of risk. ACE INA HLDGS is currently generating about -0.09 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 Together
Strength	Very Weak
Accuracy	42.19%
Values	Daily Returns

MetLife  vs.  ACE INA HLDGS

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.

ACE INA HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACE INA HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00440EAQ0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MetLife and 00440EAQ0

The main advantage of trading using opposite MetLife and 00440EAQ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, 00440EAQ0 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 00440EAQ0 will offset losses from the drop in 00440EAQ0's long position.

The idea behind MetLife and ACE INA HLDGS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.