Correlation Between Distoken Acquisition and MetLife Preferred

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

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

Diversification Opportunities for Distoken Acquisition and MetLife Preferred

0.15

Correlation Coefficient

Distoken Acquisition  MetLife Preferred

Average diversification

The 3 months correlation between Distoken and MetLife is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition 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 Distoken Acquisition 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 Distoken Acquisition 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 Distoken Acquisition i.e., Distoken Acquisition and MetLife Preferred go up and down completely randomly.

Pair Corralation between Distoken Acquisition and MetLife Preferred

Given the investment horizon of 90 days Distoken Acquisition is expected to generate 1.24 times more return on investment than MetLife Preferred. However, Distoken Acquisition is 1.24 times more volatile than MetLife Preferred Stock. It trades about -0.01 of its potential returns per unit of risk. MetLife Preferred Stock is currently generating about -0.01 per unit of risk. If you would invest  1,120  in Distoken Acquisition on December 30, 2024 and sell it today you would lose (9.00) from holding Distoken Acquisition or give up 0.8% of portfolio value over 90 days.

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

Distoken Acquisition  vs.  MetLife Preferred Stock

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

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

MetLife Preferred Stock

Risk-Adjusted Performance

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 Distoken Acquisition and MetLife Preferred

The main advantage of trading using opposite Distoken Acquisition and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distoken Acquisition 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 Distoken Acquisition 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.