Correlation Between MetLife and Globe Life
Can any of the company-specific risk be diversified away by investing in both MetLife and Globe Life 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 Globe Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Globe Life, you can compare the effects of market volatilities on MetLife and Globe Life 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 Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Globe Life.
Diversification Opportunities for MetLife and Globe Life
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between MetLife and Globe is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life 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 Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life has no effect on the direction of MetLife i.e., MetLife and Globe Life go up and down completely randomly.
Pair Corralation between MetLife and Globe Life
Considering the 90-day investment horizon MetLife is expected to generate 0.07 times more return on investment than Globe Life. However, MetLife is 14.26 times less risky than Globe Life. It trades about -0.03 of its potential returns per unit of risk. Globe Life is currently generating about -0.03 per unit of risk. If you would invest 7,310 in MetLife on January 25, 2024 and sell it today you would lose (57.00) from holding MetLife or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. Globe Life
Performance |
| Timeline |
| MetLife |
| Globe Life |
MetLife and Globe Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and Globe Life
The main advantage of trading using opposite MetLife and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, Globe Life 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 Globe Life will offset losses from the drop in Globe Life's long position.| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
| Globe Life vs. Prudential Public Limited | Globe Life vs. CNO Financial Group | Globe Life vs. MetLife Preferred Stock | Globe Life vs. American Equity 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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