Correlation Between Athene Holding and MetLife Preferred

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

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

Diversification Opportunities for Athene Holding and MetLife Preferred

0.79

Correlation Coefficient

Athene Holding  MetLife Preferred

Poor diversification

The 3 months correlation between Athene and MetLife is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Athene Holding 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 Athene Holding 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 Athene Holding 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 Athene Holding i.e., Athene Holding and MetLife Preferred go up and down completely randomly.

Pair Corralation between Athene Holding and MetLife Preferred

Assuming the 90 days trading horizon Athene Holding is expected to under-perform the MetLife Preferred. In addition to that, Athene Holding is 1.28 times more volatile than MetLife Preferred Stock. It trades about -0.09 of its total potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.13 per unit of volatility. If you would invest  2,060  in MetLife Preferred Stock on October 8, 2024 and sell it today you would earn a total of  56.00  from holding MetLife Preferred Stock or generate 2.72% return on investment over 90 days.

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

Athene Holding  vs.  MetLife Preferred Stock

Athene Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athene Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Athene Holding 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

0 of 100

Very Weak

Over the last 90 days MetLife Preferred Stock has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Athene Holding and MetLife Preferred

The main advantage of trading using opposite Athene Holding and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athene Holding 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 Athene Holding 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.