Correlation Between Duniec and MetLife
Can any of the company-specific risk be diversified away by investing in both Duniec 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 Duniec and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duniec and MetLife, you can compare the effects of market volatilities on Duniec 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 Duniec with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duniec and MetLife.
Diversification Opportunities for Duniec and MetLife
Poor diversification
The 3 months correlation between Duniec and MetLife is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Duniec and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Duniec 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 Duniec 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 Duniec i.e., Duniec and MetLife go up and down completely randomly.
Pair Corralation between Duniec and MetLife
Assuming the 90 days trading horizon Duniec is expected to under-perform the MetLife. In addition to that, Duniec is 3.29 times more volatile than MetLife. It trades about 0.0 of its total potential returns per unit of risk. MetLife is currently generating about 0.02 per unit of volatility. If you would invest 6,862 in MetLife on January 18, 2024 and sell it today you would earn a total of 30.00 from holding MetLife or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.93% |
| Values | Daily Returns |
Duniec vs. MetLife
Performance |
| Timeline |
| Duniec |
| MetLife |
Duniec and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duniec and MetLife
The main advantage of trading using opposite Duniec and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duniec 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 Duniec 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |