Correlation Between Target and MetLife

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and MetLife, you can compare the effects of market volatilities on Target 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 Target with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and MetLife.

Diversification Opportunities for Target and MetLife

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Target and MetLife is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Target and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Target 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 Target 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 Target i.e., Target and MetLife go up and down completely randomly.

Pair Corralation between Target and MetLife

Considering the 90-day investment horizon Target is expected to generate 1.2 times more return on investment than MetLife. However, Target is 1.2 times more volatile than MetLife. It trades about 0.03 of its potential returns per unit of risk. MetLife is currently generating about 0.03 per unit of risk. If you would invest  15,984  in Target on December 29, 2023 and sell it today you would earn a total of  1,483  from holding Target or generate 9.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Target  vs.  MetLife

 Performance 
       Timeline  
Target 

Risk-Adjusted Performance

13 of 100

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

Target and MetLife Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Target and MetLife

The main advantage of trading using opposite Target and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments