Correlation Between Meta Platforms and Troilus Gold

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

By analyzing existing cross correlation between Meta Platforms and Troilus Gold Corp, you can compare the effects of market volatilities on Meta Platforms and Troilus Gold 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 Meta Platforms with a short position of Troilus Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Troilus Gold.

Diversification Opportunities for Meta Platforms and Troilus Gold

-0.21

Correlation Coefficient

Meta Platforms  Troilus Gold

Very good diversification

The 3 months correlation between Meta and Troilus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Troilus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troilus Gold Corp and Meta Platforms 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 Meta Platforms are associated (or correlated) with Troilus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troilus Gold Corp has no effect on the direction of Meta Platforms i.e., Meta Platforms and Troilus Gold go up and down completely randomly.

Pair Corralation between Meta Platforms and Troilus Gold

Given the investment horizon of 90 days Meta Platforms is expected to generate 0.29 times more return on investment than Troilus Gold. However, Meta Platforms is 3.47 times less risky than Troilus Gold. It trades about 0.19 of its potential returns per unit of risk. Troilus Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  52,412  in Meta Platforms on September 13, 2024 and sell it today you would earn a total of  10,669  from holding Meta Platforms or generate 20.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Meta Platforms  vs.  Troilus Gold Corp

Meta Platforms

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Troilus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Troilus Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Meta Platforms and Troilus Gold

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

The idea behind Meta Platforms and Troilus Gold Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.