Correlation Between Isracard and MetLife
Can any of the company-specific risk be diversified away by investing in both Isracard 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 Isracard and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isracard and MetLife, you can compare the effects of market volatilities on Isracard 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 Isracard with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isracard and MetLife.
Diversification Opportunities for Isracard and MetLife
Poor diversification
The 3 months correlation between Isracard and MetLife is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Isracard 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 Isracard 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 Isracard i.e., Isracard and MetLife go up and down completely randomly.
Pair Corralation between Isracard and MetLife
Assuming the 90 days trading horizon Isracard is expected to generate 1.19 times less return on investment than MetLife. In addition to that, Isracard is 1.68 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 6,409 in MetLife on January 24, 2024 and sell it today you would earn a total of 787.00 from holding MetLife or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.79% |
| Values | Daily Returns |
Isracard vs. MetLife
Performance |
| Timeline |
| Isracard |
| MetLife |
Isracard and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isracard and MetLife
The main advantage of trading using opposite Isracard and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isracard 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.| Isracard vs. Bank Hapoalim | Isracard vs. Bank Leumi Le Israel | Isracard vs. Mizrahi Tefahot | Isracard vs. Israel Discount Bank |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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