Correlation Between PFA Invest and MetLife
Can any of the company-specific risk be diversified away by investing in both PFA Invest 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 PFA Invest and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PFA Invest Balance and MetLife, you can compare the effects of market volatilities on PFA Invest 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 PFA Invest with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of PFA Invest and MetLife.
Diversification Opportunities for PFA Invest and MetLife
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PFA and MetLife is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PFA Invest Balance and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and PFA Invest 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 PFA Invest Balance 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 PFA Invest i.e., PFA Invest and MetLife go up and down completely randomly.
Pair Corralation between PFA Invest and MetLife
Assuming the 90 days trading horizon PFA Invest is expected to generate 1.01 times less return on investment than MetLife. But when comparing it to its historical volatility, PFA Invest Balance is 2.13 times less risky than MetLife. It trades about 0.11 of its potential returns per unit of risk. MetLife is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
PFA Invest Balance vs. MetLife
Performance |
| Timeline |
| PFA Invest Balance |
| MetLife |
PFA Invest and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PFA Invest and MetLife
The main advantage of trading using opposite PFA Invest and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PFA Invest 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.| PFA Invest vs. Novo Nordisk AS | PFA Invest vs. Nordea Bank Abp | PFA Invest vs. DSV Panalpina AS | PFA Invest vs. AP Mller |
| MetLife vs. Lincoln National | MetLife vs. Manulife Financial Corp | MetLife vs. Jackson Financial | MetLife vs. Brighthouse Financial |
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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