Correlation Between MetLife and Eline Entertainment

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

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

Diversification Opportunities for MetLife and Eline Entertainment

0.27

Correlation Coefficient

MetLife  Eline Entertainment

Modest diversification

The 3 months correlation between MetLife and Eline is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Eline Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eline Entertainment and MetLife 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 are associated (or correlated) with Eline Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eline Entertainment has no effect on the direction of MetLife i.e., MetLife and Eline Entertainment go up and down completely randomly.

Pair Corralation between MetLife and Eline Entertainment

Considering the 90-day investment horizon MetLife is expected to generate 44.21 times less return on investment than Eline Entertainment. But when comparing it to its historical volatility, MetLife is 13.69 times less risky than Eline Entertainment. It trades about 0.04 of its potential returns per unit of risk. Eline Entertainment Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Eline Entertainment Group on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Eline Entertainment Group or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

MetLife  vs.  Eline Entertainment Group

MetLife

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Eline Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetLife and Eline Entertainment

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

The idea behind MetLife and Eline Entertainment Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.