Correlation Between Compugen and MetLife
Can any of the company-specific risk be diversified away by investing in both Compugen 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 Compugen and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugen and MetLife, you can compare the effects of market volatilities on Compugen 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 Compugen with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugen and MetLife.
Diversification Opportunities for Compugen and MetLife
Poor diversification
The 3 months correlation between Compugen and MetLife is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Compugen and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Compugen 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 Compugen 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 Compugen i.e., Compugen and MetLife go up and down completely randomly.
Pair Corralation between Compugen and MetLife
Assuming the 90 days trading horizon Compugen is expected to under-perform the MetLife. In addition to that, Compugen is 3.08 times more volatile than MetLife. It trades about -0.49 of its total potential returns per unit of risk. MetLife is currently generating about -0.03 per unit of volatility. If you would invest 7,310 in MetLife on January 25, 2024 and sell it today you would lose (57.00) from holding MetLife or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Compugen vs. MetLife
Performance |
| Timeline |
| Compugen |
| MetLife |
Compugen and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compugen and MetLife
The main advantage of trading using opposite Compugen and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugen 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 Compugen 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.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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