Correlation Between MetLife and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both MetLife and Brighthouse Financial 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 MetLife and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Brighthouse Financial, you can compare the effects of market volatilities on MetLife and Brighthouse Financial 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 MetLife with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Brighthouse Financial.
Diversification Opportunities for MetLife and Brighthouse Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between MetLife and Brighthouse is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and MetLife 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 MetLife are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of MetLife i.e., MetLife and Brighthouse Financial go up and down completely randomly.
Pair Corralation between MetLife and Brighthouse Financial
Considering the 90-day investment horizon MetLife is expected to under-perform the Brighthouse Financial. But the stock apears to be less risky and, when comparing its historical volatility, MetLife is 1.73 times less risky than Brighthouse Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Brighthouse Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,903 in Brighthouse Financial on January 25, 2024 and sell it today you would earn a total of 87.00 from holding Brighthouse Financial or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. Brighthouse Financial
Performance |
| Timeline |
| MetLife |
| Brighthouse Financial |
MetLife and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and Brighthouse Financial
The main advantage of trading using opposite MetLife and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.The idea behind MetLife and Brighthouse Financial 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |