Correlation Between Meta Financial and NEW MILLENNIUM
Can any of the company-specific risk be diversified away by investing in both Meta Financial and NEW MILLENNIUM 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 Financial and NEW MILLENNIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Financial Group and NEW MILLENNIUM IRON, you can compare the effects of market volatilities on Meta Financial and NEW MILLENNIUM 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 Financial with a short position of NEW MILLENNIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Financial and NEW MILLENNIUM.
Diversification Opportunities for Meta Financial and NEW MILLENNIUM
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meta and NEW is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Meta Financial Group and NEW MILLENNIUM IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW MILLENNIUM IRON and Meta Financial 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 Financial Group are associated (or correlated) with NEW MILLENNIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW MILLENNIUM IRON has no effect on the direction of Meta Financial i.e., Meta Financial and NEW MILLENNIUM go up and down completely randomly.
Pair Corralation between Meta Financial and NEW MILLENNIUM
Assuming the 90 days horizon Meta Financial Group is expected to generate 0.72 times more return on investment than NEW MILLENNIUM. However, Meta Financial Group is 1.38 times less risky than NEW MILLENNIUM. It trades about 0.27 of its potential returns per unit of risk. NEW MILLENNIUM IRON is currently generating about -0.19 per unit of risk. If you would invest 7,150 in Meta Financial Group on November 6, 2024 and sell it today you would earn a total of 600.00 from holding Meta Financial Group or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Financial Group vs. NEW MILLENNIUM IRON
Performance |
| Timeline |
| Meta Financial Group |
| NEW MILLENNIUM IRON |
Meta Financial and NEW MILLENNIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Financial and NEW MILLENNIUM
The main advantage of trading using opposite Meta Financial and NEW MILLENNIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Financial position performs unexpectedly, NEW MILLENNIUM 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 NEW MILLENNIUM will offset losses from the drop in NEW MILLENNIUM's long position.| Meta Financial vs. Addus HomeCare | Meta Financial vs. ADDUS HOMECARE | Meta Financial vs. Corporate Office Properties | Meta Financial vs. Autohome ADR |
| NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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