Correlation Between MetLife and CBAAU

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

By analyzing existing cross correlation between MetLife and CBAAU 1125 15 JUN 26, you can compare the effects of market volatilities on MetLife and CBAAU 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 CBAAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and CBAAU.

Diversification Opportunities for MetLife and CBAAU

0.46

Correlation Coefficient

MetLife  CBAAU

Very weak diversification

The 3 months correlation between MetLife and CBAAU is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and CBAAU 1125 15 JUN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBAAU 1125 15 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 CBAAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBAAU 1125 15 has no effect on the direction of MetLife i.e., MetLife and CBAAU go up and down completely randomly.

Pair Corralation between MetLife and CBAAU

Considering the 90-day investment horizon MetLife is expected to generate 2.54 times more return on investment than CBAAU. However, MetLife is 2.54 times more volatile than CBAAU 1125 15 JUN 26. It trades about 0.07 of its potential returns per unit of risk. CBAAU 1125 15 JUN 26 is currently generating about -0.17 per unit of risk. If you would invest  7,566  in MetLife on September 13, 2024 and sell it today you would earn a total of  467.00  from holding MetLife or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	53.97%
Values	Daily Returns

MetLife  vs.  CBAAU 1125 15 JUN 26

MetLife

Risk-Adjusted Performance

5 of 100

Modest

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.

CBAAU 1125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBAAU 1125 15 JUN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 CBAAU 1125 15 JUN 26 investors.

Pair Trading with MetLife and CBAAU

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

The idea behind MetLife and CBAAU 1125 15 JUN 26 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.