Correlation Between MetLife and FBL Financial

Can any of the company-specific risk be diversified away by investing in both MetLife and FBL Financial 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 MetLife and FBL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MetLife and FBL Financial Group, you can compare the effects of market volatilities on MetLife and FBL Financial 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 MetLife with a short position of FBL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and FBL Financial.

Diversification Opportunities for MetLife and FBL Financial

0.0

Correlation Coefficient

MetLife  FBL Financial

Pay attention - limited upside

The 3 months correlation between MetLife and FBL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and FBL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FBL Financial Group and MetLife 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 MetLife are associated (or correlated) with FBL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FBL Financial Group has no effect on the direction of MetLife i.e., MetLife and FBL Financial go up and down completely randomly.

Pair Corralation between MetLife and FBL Financial

If you would invest  6,014  in MetLife on February 3, 2024 and sell it today you would earn a total of  1,010  from holding MetLife or generate 16.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MetLife  vs.  FBL Financial Group

MetLife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in June 2024.

FBL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FBL Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, FBL Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MetLife and FBL Financial

The main advantage of trading using opposite MetLife and FBL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, FBL Financial 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 FBL Financial will offset losses from the drop in FBL Financial's long position.

The idea behind MetLife and FBL Financial Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.