Correlation Between Income Fund and MetLife
Can any of the company-specific risk be diversified away by investing in both Income Fund 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 Income Fund and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and MetLife, you can compare the effects of market volatilities on Income Fund 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 Income Fund with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and MetLife.
Diversification Opportunities for Income Fund and MetLife
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Income and MetLife is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Income Fund 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 Income Fund Of 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 Income Fund i.e., Income Fund and MetLife go up and down completely randomly.
Pair Corralation between Income Fund and MetLife
Assuming the 90 days horizon Income Fund is expected to generate 2.59 times less return on investment than MetLife. But when comparing it to its historical volatility, Income Fund Of is 2.42 times less risky than MetLife. It trades about 0.02 of its potential returns per unit of risk. MetLife is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,206 in MetLife on January 21, 2024 and sell it today you would earn a total of 905.00 from holding MetLife or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Income Fund Of vs. MetLife
Performance |
| Timeline |
| Income Fund |
| MetLife |
Income Fund and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and MetLife
The main advantage of trading using opposite Income Fund and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund 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.| Income Fund vs. New World Fund | Income Fund vs. American Mutual Fund | Income Fund vs. American Mutual Fund | Income Fund vs. American Funds Income |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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