Correlation Between Mid Cap and MetLife
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Index and MetLife, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and MetLife.
Diversification Opportunities for Mid Cap and MetLife
Almost no diversification
The 3 months correlation between Mid and MetLife is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Index and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Mid Cap 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 Mid Cap Index 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 Mid Cap i.e., Mid Cap and MetLife go up and down completely randomly.
Pair Corralation between Mid Cap and MetLife
Assuming the 90 days horizon Mid Cap Index is expected to generate 0.91 times more return on investment than MetLife. However, Mid Cap Index is 1.1 times less risky than MetLife. It trades about 0.16 of its potential returns per unit of risk. MetLife is currently generating about 0.13 per unit of risk. If you would invest 2,442 in Mid Cap Index on February 13, 2024 and sell it today you would earn a total of 212.00 from holding Mid Cap Index or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Index vs. MetLife
Performance |
| Timeline |
| Mid Cap Index |
| MetLife |
Mid Cap and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and MetLife
The main advantage of trading using opposite Mid Cap and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Vanguard Mid Cap Index | Mid Cap vs. Vanguard Mid Cap Index | Mid Cap vs. Vanguard Mid Cap Index | Mid Cap vs. Vanguard Mid Cap Index |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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