Correlation Between COL Financial and Metropolitan Bank

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

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

Diversification Opportunities for COL Financial and Metropolitan Bank

0.36

Correlation Coefficient

COL Financial  Metropolitan Bank

Weak diversification

The 3 months correlation between COL and Metropolitan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and COL Financial 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 COL Financial Group are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of COL Financial i.e., COL Financial and Metropolitan Bank go up and down completely randomly.

Pair Corralation between COL Financial and Metropolitan Bank

Assuming the 90 days trading horizon COL Financial Group is expected to under-perform the Metropolitan Bank. In addition to that, COL Financial is 1.37 times more volatile than Metropolitan Bank Trust. It trades about -0.04 of its total potential returns per unit of risk. Metropolitan Bank Trust is currently generating about 0.0 per unit of volatility. If you would invest  7,315  in Metropolitan Bank Trust on April 20, 2025 and sell it today you would lose (25.00) from holding Metropolitan Bank Trust or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

COL Financial Group  vs.  Metropolitan Bank Trust

COL Financial Group

Risk-Adjusted Performance

Very Weak

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

Metropolitan Bank Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with COL Financial and Metropolitan Bank

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

The idea behind COL Financial Group and Metropolitan Bank Trust 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.