Correlation Between Ping An and MetLife Preferred

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

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

Diversification Opportunities for Ping An and MetLife Preferred

-0.4

Correlation Coefficient

Ping An  MetLife Preferred

Very good diversification

The 3 months correlation between Ping and MetLife is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and MetLife Preferred Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife Preferred Stock and Ping An 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 Ping An Insurance are associated (or correlated) with MetLife Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife Preferred Stock has no effect on the direction of Ping An i.e., Ping An and MetLife Preferred go up and down completely randomly.

Pair Corralation between Ping An and MetLife Preferred

Assuming the 90 days horizon Ping An is expected to generate 22.01 times less return on investment than MetLife Preferred. In addition to that, Ping An is 4.91 times more volatile than MetLife Preferred Stock. It trades about 0.0 of its total potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.28 per unit of volatility. If you would invest  2,411  in MetLife Preferred Stock on September 18, 2024 and sell it today you would earn a total of  83.00  from holding MetLife Preferred Stock or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Ping An Insurance  vs.  MetLife Preferred Stock

Ping An Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ping An showed solid returns over the last few months and may actually be approaching a breakup point.

MetLife Preferred Stock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife Preferred Stock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MetLife Preferred is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ping An and MetLife Preferred

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

The idea behind Ping An Insurance and MetLife Preferred Stock 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.