Correlation Between Ab Global and MetLife
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and MetLife, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and MetLife.
Diversification Opportunities for Ab Global and MetLife
Very poor diversification
The 3 months correlation between GCECX and MetLife is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Ab Global 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 Ab Global E 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 Ab Global i.e., Ab Global and MetLife go up and down completely randomly.
Pair Corralation between Ab Global and MetLife
Assuming the 90 days horizon Ab Global E is expected to under-perform the MetLife. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Global E is 1.31 times less risky than MetLife. The mutual fund trades about -0.09 of its potential returns per unit of risk. The MetLife is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,306 in MetLife on January 26, 2024 and sell it today you would lose (34.00) from holding MetLife or give up 0.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Global E vs. MetLife
Performance |
Timeline |
Ab Global E |
MetLife |
Ab Global and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Global and MetLife
The main advantage of trading using opposite Ab Global and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global vs. Capital World Growth |
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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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