Correlation Between Citizens and MetLife
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and MetLife, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and MetLife.
Diversification Opportunities for Citizens and MetLife
Pay attention - limited upside
The 3 months correlation between Citizens and MetLife is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Citizens 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 Citizens 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 Citizens i.e., Citizens and MetLife go up and down completely randomly.
Pair Corralation between Citizens and MetLife
Considering the 90-day investment horizon Citizens is expected to under-perform the MetLife. In addition to that, Citizens is 2.84 times more volatile than MetLife. It trades about -0.09 of its total potential returns per unit of risk. MetLife is currently generating about 0.16 per unit of volatility. If you would invest 5,753 in MetLife on January 20, 2024 and sell it today you would earn a total of 1,358 from holding MetLife or generate 23.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citizens vs. MetLife
Performance |
Timeline |
Citizens |
MetLife |
Citizens and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citizens and MetLife
The main advantage of trading using opposite Citizens and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.Citizens vs. Vericity | Citizens vs. CNO Financial Group | Citizens vs. National Western Life | Citizens vs. Brighthouse Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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