Correlation Between MetLife and Independence Holding

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

By analyzing existing cross correlation between MetLife and Independence Holding, you can compare the effects of market volatilities on MetLife and Independence Holding 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 Independence Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Independence Holding.

Diversification Opportunities for MetLife and Independence Holding

0.0

Correlation Coefficient

MetLife  Independence Holding

Pay attention - limited upside

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

Pair Corralation between MetLife and Independence Holding

If you would invest (100.00) in Independence Holding on January 31, 2024 and sell it today you would earn a total of  100.00  from holding Independence Holding or generate -100.0% return on investment over 90 days.

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

MetLife  vs.  Independence Holding

MetLife

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MetLife is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Independence Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Independence Holding is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MetLife and Independence Holding

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

The idea behind MetLife and Independence Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.