Correlation Between American National and MetLife Preferred

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

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

Diversification Opportunities for American National and MetLife Preferred

0.28

Correlation Coefficient

American National  MetLife Preferred

Modest diversification

The 3 months correlation between American and MetLife is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding American National Group and MetLife Preferred Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife Preferred Stock and American National 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 American National Group are associated (or correlated) with MetLife Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife Preferred Stock has no effect on the direction of American National i.e., American National and MetLife Preferred go up and down completely randomly.

Pair Corralation between American National and MetLife Preferred

Assuming the 90 days trading horizon American National is expected to generate 2.78 times less return on investment than MetLife Preferred. But when comparing it to its historical volatility, American National Group is 4.59 times less risky than MetLife Preferred. It trades about 0.03 of its potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,104  in MetLife Preferred Stock on November 28, 2024 and sell it today you would earn a total of  20.00  from holding MetLife Preferred Stock or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

American National Group  vs.  MetLife Preferred Stock

American National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American National Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, American National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MetLife Preferred Stock

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife Preferred Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MetLife Preferred is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American National and MetLife Preferred

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

The idea behind American National Group and MetLife Preferred Stock 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.