Correlation Between First International and MetLife
Can any of the company-specific risk be diversified away by investing in both First International 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 First International and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First International Bank and MetLife, you can compare the effects of market volatilities on First International 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 First International with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and MetLife.
Diversification Opportunities for First International and MetLife
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and MetLife is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and First International 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 First International Bank 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 First International i.e., First International and MetLife go up and down completely randomly.
Pair Corralation between First International and MetLife
Assuming the 90 days trading horizon First International Bank is expected to under-perform the MetLife. In addition to that, First International is 2.32 times more volatile than MetLife. It trades about -0.08 of its total potential returns per unit of risk. MetLife is currently generating about 0.11 per unit of volatility. If you would invest 6,933 in MetLife on January 24, 2024 and sell it today you would earn a total of 263.00 from holding MetLife or generate 3.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 76.19% |
Values | Daily Returns |
First International Bank vs. MetLife
Performance |
Timeline |
First International Bank |
MetLife |
First International and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First International and MetLife
The main advantage of trading using opposite First International and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International 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.First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bank Leumi Le Israel | First International vs. Bank Hapoalim |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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