Correlation Between Meta Platforms and Carsales
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and CarsalesCom, you can compare the effects of market volatilities on Meta Platforms and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Carsales.
Diversification Opportunities for Meta Platforms and Carsales
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and Carsales is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Meta Platforms i.e., Meta Platforms and Carsales go up and down completely randomly.
Pair Corralation between Meta Platforms and Carsales
Assuming the 90 days trading horizon Meta Platforms is expected to generate 1.1 times more return on investment than Carsales. However, Meta Platforms is 1.1 times more volatile than CarsalesCom. It trades about 0.09 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of risk. If you would invest 43,183 in Meta Platforms on September 3, 2024 and sell it today you would earn a total of 11,007 from holding Meta Platforms or generate 25.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. CarsalesCom
Performance |
| Timeline |
| Meta Platforms |
| CarsalesCom |
Meta Platforms and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Carsales
The main advantage of trading using opposite Meta Platforms and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Meta Platforms vs. Amazon Inc | Meta Platforms vs. Apple Inc | Meta Platforms vs. Meta Platforms | Meta Platforms vs. Microsoft |
| Carsales vs. Hyrican Informationssysteme Aktiengesellschaft | Carsales vs. Fidelity National Information | Carsales vs. Science Applications International | Carsales vs. Nok Airlines PCL |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |