Correlation Between Precious Metals and Meta Platforms

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

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

Diversification Opportunities for Precious Metals and Meta Platforms

-0.19

Correlation Coefficient

Precious Metals  Meta Platforms

Good diversification

The 3 months correlation between Precious and Meta is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Meta Platforms CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms CDR and Precious Metals 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 Precious Metals And are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms CDR has no effect on the direction of Precious Metals i.e., Precious Metals and Meta Platforms go up and down completely randomly.

Pair Corralation between Precious Metals and Meta Platforms

Assuming the 90 days trading horizon Precious Metals is expected to generate 12.74 times less return on investment than Meta Platforms. But when comparing it to its historical volatility, Precious Metals And is 1.05 times less risky than Meta Platforms. It trades about 0.01 of its potential returns per unit of risk. Meta Platforms CDR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,637  in Meta Platforms CDR on September 12, 2024 and sell it today you would earn a total of  1,806  from holding Meta Platforms CDR or generate 110.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Precious Metals And  vs.  Meta Platforms CDR

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Meta Platforms CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Meta Platforms exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precious Metals and Meta Platforms

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

The idea behind Precious Metals And and Meta Platforms CDR 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 CEOs Directory module to screen CEOs from public companies around the world.