Correlation Between Abacus Life and MetLife

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

By analyzing existing cross correlation between Abacus Life and MetLife, you can compare the effects of market volatilities on Abacus Life and MetLife 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 Abacus Life with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life and MetLife.

Diversification Opportunities for Abacus Life and MetLife

0.33

Correlation Coefficient

Abacus Life  MetLife

Weak diversification

The 3 months correlation between Abacus and MetLife is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Abacus Life 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 Abacus Life are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Abacus Life i.e., Abacus Life and MetLife go up and down completely randomly.

Pair Corralation between Abacus Life and MetLife

Considering the 90-day investment horizon Abacus Life is expected to generate 1.59 times more return on investment than MetLife. However, Abacus Life is 1.59 times more volatile than MetLife. It trades about 0.0 of its potential returns per unit of risk. MetLife is currently generating about -0.01 per unit of risk. If you would invest  775.00  in Abacus Life on December 28, 2024 and sell it today you would lose (13.00) from holding Abacus Life or give up 1.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Abacus Life  vs.  MetLife

Abacus Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abacus Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Abacus Life is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

MetLife

Risk-Adjusted Performance

Weak

Over the last 90 days MetLife has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MetLife is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Abacus Life and MetLife

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

The idea behind Abacus Life and MetLife 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.