Correlation Between Postal Savings and Meta Financial
Can any of the company-specific risk be diversified away by investing in both Postal Savings and Meta Financial 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 Postal Savings and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Meta Financial Group, you can compare the effects of market volatilities on Postal Savings and Meta Financial 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 Postal Savings with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Meta Financial.
Diversification Opportunities for Postal Savings and Meta Financial
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Postal and Meta is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Postal Savings i.e., Postal Savings and Meta Financial go up and down completely randomly.
Pair Corralation between Postal Savings and Meta Financial
Assuming the 90 days horizon Postal Savings is expected to generate 3.21 times less return on investment than Meta Financial. But when comparing it to its historical volatility, Postal Savings Bank is 1.2 times less risky than Meta Financial. It trades about 0.07 of its potential returns per unit of risk. Meta Financial Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,150 in Meta Financial Group on November 3, 2024 and sell it today you would earn a total of 450.00 from holding Meta Financial Group or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. Meta Financial Group
Performance |
| Timeline |
| Postal Savings Bank |
| Meta Financial Group |
Postal Savings and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Meta Financial
The main advantage of trading using opposite Postal Savings and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, Meta Financial 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 Financial will offset losses from the drop in Meta Financial's long position.| Postal Savings vs. POSBO UNSPADRS20YC1 | Postal Savings vs. Oversea Chinese Banking | Postal Savings vs. UNICREDIT SPA ADR | Postal Savings vs. UTD OV BK LOC ADR1 |
| Meta Financial vs. POSBO UNSPADRS20YC1 | Meta Financial vs. Postal Savings Bank | Meta Financial vs. Oversea Chinese Banking | Meta Financial vs. UNICREDIT SPA ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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