Correlation Between Aker BP and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Aker BP 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 Aker BP and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker BP ASA and Meta Platforms, you can compare the effects of market volatilities on Aker BP 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 Aker BP with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Meta Platforms.
Diversification Opportunities for Aker BP and Meta Platforms
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aker and Meta is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Aker BP 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 Aker BP ASA 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 has no effect on the direction of Aker BP i.e., Aker BP and Meta Platforms go up and down completely randomly.
Pair Corralation between Aker BP and Meta Platforms
Assuming the 90 days horizon Aker BP ASA is expected to under-perform the Meta Platforms. In addition to that, Aker BP is 4.36 times more volatile than Meta Platforms. It trades about -0.01 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.17 per unit of volatility. If you would invest 56,068 in Meta Platforms on September 4, 2024 and sell it today you would earn a total of 3,215 from holding Meta Platforms or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aker BP ASA vs. Meta Platforms
Performance |
| Timeline |
| Aker BP ASA |
| Meta Platforms |
Aker BP and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Meta Platforms
The main advantage of trading using opposite Aker BP and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP 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 Aker BP ASA and Meta Platforms 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.| Meta Platforms vs. Asset Entities Class | Meta Platforms vs. Shutterstock | Meta Platforms vs. Match Group | Meta Platforms vs. Snap Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |