Correlation Between MetLife Preferred and Ping An

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

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

Diversification Opportunities for MetLife Preferred and Ping An

-0.4

Correlation Coefficient

MetLife Preferred  Ping An

Very good diversification

The 3 months correlation between MetLife and Ping is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MetLife Preferred Stock and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and MetLife Preferred 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 Preferred Stock are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of MetLife Preferred i.e., MetLife Preferred and Ping An go up and down completely randomly.

Pair Corralation between MetLife Preferred and Ping An

Assuming the 90 days trading horizon MetLife Preferred Stock is expected to generate 0.2 times more return on investment than Ping An. However, MetLife Preferred Stock is 4.91 times less risky than Ping An. It trades about 0.28 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.0 per unit of risk. If you would invest  2,411  in MetLife Preferred Stock on September 18, 2024 and sell it today you would earn a total of  83.00  from holding MetLife Preferred Stock or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

MetLife Preferred Stock  vs.  Ping An Insurance

MetLife Preferred Stock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife Preferred Stock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MetLife Preferred is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ping An Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ping An showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetLife Preferred and Ping An

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

The idea behind MetLife Preferred Stock and Ping An Insurance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.