Correlation Between Kepler Weber and MetLife

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Can any of the company-specific risk be diversified away by investing in both Kepler Weber 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 Kepler Weber and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kepler Weber SA and MetLife, you can compare the effects of market volatilities on Kepler Weber 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 Kepler Weber with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kepler Weber and MetLife.

Diversification Opportunities for Kepler Weber and MetLife

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Kepler and MetLife is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kepler Weber SA and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Kepler Weber 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 Kepler Weber SA 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 Kepler Weber i.e., Kepler Weber and MetLife go up and down completely randomly.

Pair Corralation between Kepler Weber and MetLife

Assuming the 90 days trading horizon Kepler Weber SA is expected to generate 1.45 times more return on investment than MetLife. However, Kepler Weber is 1.45 times more volatile than MetLife. It trades about 0.04 of its potential returns per unit of risk. MetLife is currently generating about 0.02 per unit of risk. If you would invest  752.00  in Kepler Weber SA on December 29, 2023 and sell it today you would earn a total of  323.00  from holding Kepler Weber SA or generate 42.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

Kepler Weber SA  vs.  MetLife

 Performance 
       Timeline  
Kepler Weber SA 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kepler Weber SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kepler Weber is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
MetLife 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, MetLife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kepler Weber and MetLife Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kepler Weber and MetLife

The main advantage of trading using opposite Kepler Weber and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kepler Weber 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.
The idea behind Kepler Weber SA and MetLife pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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