Correlation Between Copart and MetLife
Can any of the company-specific risk be diversified away by investing in both Copart 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 Copart and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copart Inc and MetLife, you can compare the effects of market volatilities on Copart 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 Copart with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copart and MetLife.
Diversification Opportunities for Copart and MetLife
Very poor diversification
The 3 months correlation between Copart and MetLife is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Copart Inc and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Copart 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 Copart Inc 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 Copart i.e., Copart and MetLife go up and down completely randomly.
Pair Corralation between Copart and MetLife
Given the investment horizon of 90 days Copart Inc is expected to under-perform the MetLife. In addition to that, Copart is 1.21 times more volatile than MetLife. It trades about -0.16 of its total potential returns per unit of risk. MetLife is currently generating about -0.02 per unit of volatility. If you would invest 7,306 in MetLife on January 26, 2024 and sell it today you would lose (34.00) from holding MetLife or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copart Inc vs. MetLife
Performance |
| Timeline |
| Copart Inc |
| MetLife |
Copart and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copart and MetLife
The main advantage of trading using opposite Copart and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copart 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.| Copart vs. Global Payments | Copart vs. ABM Industries Incorporated | Copart vs. Thomson Reuters Corp | Copart vs. Aramark Holdings |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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