Correlation Between Aker ASA and MetLife
Can any of the company-specific risk be diversified away by investing in both Aker ASA 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 Aker ASA and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker ASA and MetLife, you can compare the effects of market volatilities on Aker ASA 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 Aker ASA with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and MetLife.
Diversification Opportunities for Aker ASA and MetLife
Good diversification
The 3 months correlation between Aker and MetLife is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Aker ASA 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 Aker ASA 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 Aker ASA i.e., Aker ASA and MetLife go up and down completely randomly.
Pair Corralation between Aker ASA and MetLife
Assuming the 90 days trading horizon Aker ASA is expected to under-perform the MetLife. In addition to that, Aker ASA is 1.04 times more volatile than MetLife. It trades about -0.01 of its total potential returns per unit of risk. MetLife is currently generating about 0.02 per unit of volatility. If you would invest 6,277 in MetLife on January 17, 2024 and sell it today you would earn a total of 667.00 from holding MetLife or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Aker ASA vs. MetLife
Performance |
| Timeline |
| Aker ASA |
| MetLife |
Aker ASA and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker ASA and MetLife
The main advantage of trading using opposite Aker ASA and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA 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.| Aker ASA vs. Storebrand ASA | Aker ASA vs. Aker Solutions ASA | Aker ASA vs. DnB ASA | Aker ASA vs. Orkla ASA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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