Correlation Between Meta Platforms and British American
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By analyzing existing cross correlation between Meta Platforms and British American Tobacco, you can compare the effects of market volatilities on Meta Platforms and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and British American.
Diversification Opportunities for Meta Platforms and British American
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meta and British is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Meta Platforms i.e., Meta Platforms and British American go up and down completely randomly.
Pair Corralation between Meta Platforms and British American
Assuming the 90 days trading horizon Meta Platforms is expected to generate 2.04 times more return on investment than British American. However, Meta Platforms is 2.04 times more volatile than British American Tobacco. It trades about 0.29 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.53 per unit of risk. If you would invest 51,860 in Meta Platforms on September 5, 2024 and sell it today you would earn a total of 5,830 from holding Meta Platforms or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. British American Tobacco
Performance |
| Timeline |
| Meta Platforms |
| British American Tobacco |
Meta Platforms and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and British American
The main advantage of trading using opposite Meta Platforms and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Meta Platforms vs. British American Tobacco | Meta Platforms vs. Summit Materials | Meta Platforms vs. Thai Beverage Public | Meta Platforms vs. IMPERIAL TOBACCO |
| British American vs. British American Tobacco | British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Imperial Brands PLC |
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