Correlation Between Procter Gamble and MetLife
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and MetLife 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 Procter Gamble and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and MetLife, you can compare the effects of market volatilities on Procter Gamble and MetLife 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 Procter Gamble with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and MetLife.
Diversification Opportunities for Procter Gamble and MetLife
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and MetLife is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Procter Gamble 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 Procter Gamble are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Procter Gamble i.e., Procter Gamble and MetLife go up and down completely randomly.
Pair Corralation between Procter Gamble and MetLife
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.52 times less return on investment than MetLife. But when comparing it to its historical volatility, Procter Gamble is 1.13 times less risky than MetLife. It trades about 0.03 of its potential returns per unit of risk. MetLife is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,099 in MetLife on December 28, 2024 and sell it today you would earn a total of 206.00 from holding MetLife or generate 2.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Procter Gamble vs. MetLife
Performance |
Timeline |
Procter Gamble |
MetLife |
Procter Gamble and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and MetLife
The main advantage of trading using opposite Procter Gamble and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
MetLife vs. Aflac Incorporated | MetLife vs. Globe Life | MetLife vs. CNO Financial Group | MetLife vs. Brighthouse Financial |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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