Correlation Between Illumina and MetLife
Can any of the company-specific risk be diversified away by investing in both Illumina 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 Illumina and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Illumina and MetLife, you can compare the effects of market volatilities on Illumina 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 Illumina with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Illumina and MetLife.
Diversification Opportunities for Illumina and MetLife
Very good diversification
The 3 months correlation between Illumina and MetLife is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Illumina and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Illumina 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 Illumina 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 Illumina i.e., Illumina and MetLife go up and down completely randomly.
Pair Corralation between Illumina and MetLife
Given the investment horizon of 90 days Illumina is expected to under-perform the MetLife. In addition to that, Illumina is 2.33 times more volatile than MetLife. It trades about -0.23 of its total potential returns per unit of risk. MetLife is currently generating about -0.08 per unit of volatility. If you would invest 7,310 in MetLife on January 24, 2024 and sell it today you would lose (114.00) from holding MetLife or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Illumina vs. MetLife
Performance |
| Timeline |
| Illumina |
| MetLife |
Illumina and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Illumina and MetLife
The main advantage of trading using opposite Illumina and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Illumina 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.| Illumina vs. Nuvation Bio | Illumina vs. Lyell Immunopharma | Illumina vs. Century Therapeutics | Illumina vs. Generation BioCo |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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