Correlation Between MetLife and Yuenglings Ice

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

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

Diversification Opportunities for MetLife and Yuenglings Ice

-0.55

Correlation Coefficient

MetLife  Yuenglings Ice

Excellent diversification

The 3 months correlation between MetLife and Yuenglings is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Yuenglings Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuenglings Ice Cream 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 Yuenglings Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuenglings Ice Cream has no effect on the direction of MetLife i.e., MetLife and Yuenglings Ice go up and down completely randomly.

Pair Corralation between MetLife and Yuenglings Ice

Considering the 90-day investment horizon MetLife is expected to generate 0.1 times more return on investment than Yuenglings Ice. However, MetLife is 10.16 times less risky than Yuenglings Ice. It trades about 0.3 of its potential returns per unit of risk. Yuenglings Ice Cream is currently generating about 0.01 per unit of risk. If you would invest  7,801  in MetLife on September 4, 2024 and sell it today you would earn a total of  887.00  from holding MetLife or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

MetLife  vs.  Yuenglings Ice Cream

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.

Yuenglings Ice Cream

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuenglings Ice Cream are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Yuenglings Ice displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetLife and Yuenglings Ice

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

The idea behind MetLife and Yuenglings Ice Cream 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.