Correlation Between Triumph and MetLife
Can any of the company-specific risk be diversified away by investing in both Triumph 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 Triumph and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and MetLife, you can compare the effects of market volatilities on Triumph 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 Triumph with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and MetLife.
Diversification Opportunities for Triumph and MetLife
Very good diversification
The 3 months correlation between Triumph and MetLife is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Triumph 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 Triumph Group 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 Triumph i.e., Triumph and MetLife go up and down completely randomly.
Pair Corralation between Triumph and MetLife
Considering the 90-day investment horizon Triumph Group is expected to generate 2.27 times more return on investment than MetLife. However, Triumph is 2.27 times more volatile than MetLife. It trades about 0.02 of its potential returns per unit of risk. MetLife is currently generating about 0.02 per unit of risk. If you would invest 1,262 in Triumph Group on January 24, 2024 and sell it today you would earn a total of 37.00 from holding Triumph Group or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Group vs. MetLife
Performance |
| Timeline |
| Triumph Group |
| MetLife |
Triumph and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and MetLife
The main advantage of trading using opposite Triumph and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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.The idea behind Triumph Group and MetLife 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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