Correlation Between Metcash and MetLife
Can any of the company-specific risk be diversified away by investing in both Metcash 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 Metcash and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metcash Limited and MetLife, you can compare the effects of market volatilities on Metcash 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 Metcash with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metcash and MetLife.
Diversification Opportunities for Metcash and MetLife
Poor diversification
The 3 months correlation between Metcash and MetLife is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metcash Limited and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Metcash 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 Metcash Limited 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 Metcash i.e., Metcash and MetLife go up and down completely randomly.
Pair Corralation between Metcash and MetLife
Assuming the 90 days horizon Metcash is expected to generate 1.74 times less return on investment than MetLife. In addition to that, Metcash is 1.22 times more volatile than MetLife. It trades about 0.05 of its total potential returns per unit of risk. MetLife is currently generating about 0.12 per unit of volatility. If you would invest 6,802 in MetLife on February 11, 2024 and sell it today you would earn a total of 471.00 from holding MetLife or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Metcash Limited vs. MetLife
Performance |
| Timeline |
| Metcash Limited |
| MetLife |
Metcash and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metcash and MetLife
The main advantage of trading using opposite Metcash and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metcash 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.| Metcash vs. Superior Plus Corp | Metcash vs. Origin Agritech | Metcash vs. Identiv | Metcash vs. INTUITIVE SURGICAL |
| MetLife vs. American Equity Investment | MetLife vs. MetLife Preferred Stock | MetLife vs. Jackson Financial | MetLife vs. MetLife Preferred Stock |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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