Correlation Between Alma Media and MetLife
Can any of the company-specific risk be diversified away by investing in both Alma Media 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 Alma Media and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alma Media Oyj and MetLife, you can compare the effects of market volatilities on Alma Media 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 Alma Media with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alma Media and MetLife.
Diversification Opportunities for Alma Media and MetLife
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alma and MetLife is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media Oyj and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Alma Media 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 Alma Media Oyj 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 Alma Media i.e., Alma Media and MetLife go up and down completely randomly.
Pair Corralation between Alma Media and MetLife
Assuming the 90 days trading horizon Alma Media is expected to generate 2.31 times less return on investment than MetLife. But when comparing it to its historical volatility, Alma Media Oyj is 1.2 times less risky than MetLife. It trades about 0.03 of its potential returns per unit of risk. MetLife is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,032 in MetLife on January 26, 2024 and sell it today you would earn a total of 240.00 from holding MetLife or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alma Media Oyj vs. MetLife
Performance |
| Timeline |
| Alma Media Oyj |
| MetLife |
Alma Media and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alma Media and MetLife
The main advantage of trading using opposite Alma Media and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alma Media 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.| Alma Media vs. Tokmanni Group Oyj | Alma Media vs. Kemira Oyj | Alma Media vs. Elisa Oyj | Alma Media vs. Valmet Oyj |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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