Correlation Between MetLife and ZALANDO SE
Can any of the company-specific risk be diversified away by investing in both MetLife and ZALANDO SE 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 ZALANDO SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and ZALANDO SE ADR, you can compare the effects of market volatilities on MetLife and ZALANDO SE 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 ZALANDO SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and ZALANDO SE.
Diversification Opportunities for MetLife and ZALANDO SE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetLife and ZALANDO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and ZALANDO SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZALANDO SE ADR 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 ZALANDO SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZALANDO SE ADR has no effect on the direction of MetLife i.e., MetLife and ZALANDO SE go up and down completely randomly.
Pair Corralation between MetLife and ZALANDO SE
Considering the 90-day investment horizon MetLife is expected to generate 2.4 times less return on investment than ZALANDO SE. But when comparing it to its historical volatility, MetLife is 1.68 times less risky than ZALANDO SE. It trades about 0.16 of its potential returns per unit of risk. ZALANDO SE ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,218 in ZALANDO SE ADR on September 6, 2024 and sell it today you would earn a total of 519.00 from holding ZALANDO SE ADR or generate 42.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
MetLife vs. ZALANDO SE ADR
Performance |
Timeline |
MetLife |
ZALANDO SE ADR |
MetLife and ZALANDO SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MetLife and ZALANDO SE
The main advantage of trading using opposite MetLife and ZALANDO SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, ZALANDO SE 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 ZALANDO SE will offset losses from the drop in ZALANDO SE's long position.MetLife vs. Aflac Incorporated | MetLife vs. Manulife Financial Corp | MetLife vs. Jackson Financial | MetLife vs. CNO Financial Group |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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