Correlation Between MetLife and Appreciate Holdings

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

By analyzing existing cross correlation between MetLife and Appreciate Holdings, you can compare the effects of market volatilities on MetLife and Appreciate Holdings 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 Appreciate Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Appreciate Holdings.

Diversification Opportunities for MetLife and Appreciate Holdings

-0.6

Correlation Coefficient

MetLife  Appreciate Holdings

Excellent diversification

The 3 months correlation between MetLife and Appreciate is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Appreciate Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appreciate Holdings 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 Appreciate Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appreciate Holdings has no effect on the direction of MetLife i.e., MetLife and Appreciate Holdings go up and down completely randomly.

Pair Corralation between MetLife and Appreciate Holdings

If you would invest  6,296  in MetLife on September 4, 2024 and sell it today you would earn a total of  2,276  from holding MetLife or generate 36.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.4%
Values	Daily Returns

MetLife  vs.  Appreciate Holdings

MetLife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Appreciate Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appreciate Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Appreciate Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MetLife and Appreciate Holdings

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

The idea behind MetLife and Appreciate Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.