Correlation Between United Parcel and MetLife
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and MetLife, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and MetLife.
Diversification Opportunities for United Parcel and MetLife
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and MetLife is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and MetLife go up and down completely randomly.
Pair Corralation between United Parcel and MetLife
Considering the 90-day investment horizon United Parcel is expected to generate 1.98 times less return on investment than MetLife. In addition to that, United Parcel is 1.49 times more volatile than MetLife. It trades about 0.06 of its total potential returns per unit of risk. MetLife is currently generating about 0.18 per unit of volatility. If you would invest 5,733 in MetLife on January 25, 2024 and sell it today you would earn a total of 1,539 from holding MetLife or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. MetLife
Performance |
| Timeline |
| United Parcel Service |
| MetLife |
United Parcel and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and MetLife
The main advantage of trading using opposite United Parcel and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.| United Parcel vs. GXO Logistics | United Parcel vs. JB Hunt Transport | United Parcel vs. Expeditors International of | United Parcel vs. CH Robinson Worldwide |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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