Correlation Between Capitol Federal and Meta Financial
Can any of the company-specific risk be diversified away by investing in both Capitol Federal 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 Capitol Federal and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Federal Financial and Meta Financial Group, you can compare the effects of market volatilities on Capitol Federal 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 Capitol Federal with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Federal and Meta Financial.
Diversification Opportunities for Capitol Federal and Meta Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capitol and Meta is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial 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 Capitol Federal 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 Capitol Federal Financial 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 Capitol Federal i.e., Capitol Federal and Meta Financial go up and down completely randomly.
Pair Corralation between Capitol Federal and Meta Financial
Given the investment horizon of 90 days Capitol Federal is expected to generate 1.38 times less return on investment than Meta Financial. In addition to that, Capitol Federal is 1.01 times more volatile than Meta Financial Group. It trades about 0.12 of its total potential returns per unit of risk. Meta Financial Group is currently generating about 0.16 per unit of volatility. If you would invest 6,819 in Meta Financial Group on August 31, 2024 and sell it today you would earn a total of 1,627 from holding Meta Financial Group or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Federal Financial vs. Meta Financial Group
Performance |
| Timeline |
| Capitol Federal Financial |
| Meta Financial Group |
Capitol Federal and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Federal and Meta Financial
The main advantage of trading using opposite Capitol Federal and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Federal 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.| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
| Meta Financial vs. Capitol Federal Financial | Meta Financial vs. Colony Bankcorp | Meta Financial vs. First Mid Illinois | Meta Financial vs. Meridian Bank |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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