Correlation Between 1919 Socially and MetLife

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Can any of the company-specific risk be diversified away by investing in both 1919 Socially 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 1919 Socially and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1919 Socially Responsive and MetLife, you can compare the effects of market volatilities on 1919 Socially 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 1919 Socially with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1919 Socially and MetLife.

Diversification Opportunities for 1919 Socially and MetLife

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between 1919 and MetLife is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 1919 SOCIALLY RESPONSIVE and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and 1919 Socially 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 1919 Socially Responsive 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 1919 Socially i.e., 1919 Socially and MetLife go up and down completely randomly.

Pair Corralation between 1919 Socially and MetLife

Assuming the 90 days horizon 1919 Socially is expected to generate 1.52 times less return on investment than MetLife. But when comparing it to its historical volatility, 1919 Socially Responsive is 2.55 times less risky than MetLife. It trades about 0.14 of its potential returns per unit of risk. MetLife is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,601  in MetLife on December 29, 2023 and sell it today you would earn a total of  1,810  from holding MetLife or generate 32.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

1919 SOCIALLY RESPONSIVE  vs.  MetLife

 Performance 
       Timeline  
1919 Socially Responsive 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in 1919 Socially Responsive are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, 1919 Socially may actually be approaching a critical reversion point that can send shares even higher in April 2024.
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.

1919 Socially and MetLife Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 1919 Socially and MetLife

The main advantage of trading using opposite 1919 Socially and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1919 Socially 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 1919 Socially Responsive 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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