Correlation Between MetLife and Hill Street
Can any of the company-specific risk be diversified away by investing in both MetLife and Hill Street 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 Hill Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Hill Street Beverage, you can compare the effects of market volatilities on MetLife and Hill Street 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 Hill Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Hill Street.
Diversification Opportunities for MetLife and Hill Street
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MetLife and Hill is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Hill Street Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hill Street Beverage 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 Hill Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hill Street Beverage has no effect on the direction of MetLife i.e., MetLife and Hill Street go up and down completely randomly.
Pair Corralation between MetLife and Hill Street
Considering the 90-day investment horizon MetLife is expected to generate 0.27 times more return on investment than Hill Street. However, MetLife is 3.68 times less risky than Hill Street. It trades about 0.09 of its potential returns per unit of risk. Hill Street Beverage is currently generating about -0.04 per unit of risk. If you would invest 7,494 in MetLife on September 12, 2024 and sell it today you would earn a total of 680.00 from holding MetLife or generate 9.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
MetLife vs. Hill Street Beverage
Performance |
Timeline |
MetLife |
Hill Street Beverage |
MetLife and Hill Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MetLife and Hill Street
The main advantage of trading using opposite MetLife and Hill Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, Hill Street 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 Hill Street will offset losses from the drop in Hill Street's long position.MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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