Correlation Between National Bank and MetLife
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and MetLife, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and MetLife.
Diversification Opportunities for National Bank and MetLife
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and MetLife is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and MetLife go up and down completely randomly.
Pair Corralation between National Bank and MetLife
Assuming the 90 days horizon National Bank is expected to generate 5.39 times less return on investment than MetLife. In addition to that, National Bank is 1.61 times more volatile than MetLife. It trades about 0.01 of its total potential returns per unit of risk. MetLife is currently generating about 0.05 per unit of volatility. If you would invest 7,032 in MetLife on January 26, 2024 and sell it today you would earn a total of 240.00 from holding MetLife or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. MetLife
Performance |
| Timeline |
| National Bank Holdings |
| MetLife |
National Bank and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and MetLife
The main advantage of trading using opposite National Bank and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech | National Bank vs. Identiv | National Bank vs. INTUITIVE SURGICAL |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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