Correlation Between New Horizon and MetLife
Can any of the company-specific risk be diversified away by investing in both New Horizon 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 New Horizon and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Horizon Group and MetLife, you can compare the effects of market volatilities on New Horizon 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 New Horizon with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Horizon and MetLife.
Diversification Opportunities for New Horizon and MetLife
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and MetLife is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding New Horizon Group and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and New Horizon 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 New Horizon Group 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 New Horizon i.e., New Horizon and MetLife go up and down completely randomly.
Pair Corralation between New Horizon and MetLife
Assuming the 90 days trading horizon New Horizon Group is expected to generate 5.03 times more return on investment than MetLife. However, New Horizon is 5.03 times more volatile than MetLife. It trades about 0.1 of its potential returns per unit of risk. MetLife is currently generating about 0.06 per unit of risk. If you would invest 19,800 in New Horizon Group on January 20, 2024 and sell it today you would earn a total of 33,800 from holding New Horizon Group or generate 170.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.05% |
| Values | Daily Returns |
New Horizon Group vs. MetLife
Performance |
| Timeline |
| New Horizon Group |
| MetLife |
New Horizon and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Horizon and MetLife
The main advantage of trading using opposite New Horizon and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Horizon 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.| New Horizon vs. Migdal Insurance | New Horizon vs. The Phoenix Holdings | New Horizon vs. Harel Insurance Investments | New Horizon vs. Clal Insurance Enterprises |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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