Correlation Between Prudential Financial and MetLife Preferred

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

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

Diversification Opportunities for Prudential Financial and MetLife Preferred

0.07

Correlation Coefficient

Prudential Financial  MetLife Preferred

Significant diversification

The 3 months correlation between Prudential and MetLife is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 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 Prudential Financial 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 Prudential Financial 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 Prudential Financial i.e., Prudential Financial and MetLife Preferred go up and down completely randomly.

Pair Corralation between Prudential Financial and MetLife Preferred

Considering the 90-day investment horizon Prudential Financial is expected to under-perform the MetLife Preferred. In addition to that, Prudential Financial is 1.95 times more volatile than MetLife Preferred Stock. It trades about -0.27 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Prudential Financial  vs.  MetLife Preferred Stock

Prudential Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Prudential Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Prudential Financial and MetLife Preferred

The main advantage of trading using opposite Prudential Financial and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial 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 Prudential Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..