Correlation Between MetLife and BOSTON

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

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

Diversification Opportunities for MetLife and BOSTON

-0.2

Correlation Coefficient

MetLife  BOSTON

Good diversification

The 3 months correlation between MetLife and BOSTON is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and BOSTON PROPERTIES LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON PROPERTIES 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 BOSTON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON PROPERTIES has no effect on the direction of MetLife i.e., MetLife and BOSTON go up and down completely randomly.

Pair Corralation between MetLife and BOSTON

Considering the 90-day investment horizon MetLife is expected to generate 1.57 times more return on investment than BOSTON. However, MetLife is 1.57 times more volatile than BOSTON PROPERTIES LP. It trades about 0.08 of its potential returns per unit of risk. BOSTON PROPERTIES LP is currently generating about -0.15 per unit of risk. If you would invest  7,494  in MetLife on September 12, 2024 and sell it today you would earn a total of  539.00  from holding MetLife or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

MetLife  vs.  BOSTON PROPERTIES LP

MetLife

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BOSTON PROPERTIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOSTON PROPERTIES LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BOSTON PROPERTIES LP investors.

Pair Trading with MetLife and BOSTON

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

The idea behind MetLife and BOSTON PROPERTIES LP 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.