Correlation Between North Media and MetLife
Can any of the company-specific risk be diversified away by investing in both North Media 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 North Media and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and MetLife, you can compare the effects of market volatilities on North Media 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 North Media with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and MetLife.
Diversification Opportunities for North Media and MetLife
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and MetLife is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and North Media 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 North Media AS 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 North Media i.e., North Media and MetLife go up and down completely randomly.
Pair Corralation between North Media and MetLife
Assuming the 90 days trading horizon North Media AS is expected to under-perform the MetLife. In addition to that, North Media is 2.27 times more volatile than MetLife. It trades about -0.19 of its total potential returns per unit of risk. MetLife is currently generating about -0.17 per unit of volatility. If you would invest 7,240 in MetLife on January 19, 2024 and sell it today you would lose (241.00) from holding MetLife or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
North Media AS vs. MetLife
Performance |
| Timeline |
| North Media AS |
| MetLife |
North Media and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and MetLife
The main advantage of trading using opposite North Media and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media 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.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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