Correlation Between Meta Platforms and GP Investments
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and GP Investments 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 GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and GP Investments, you can compare the effects of market volatilities on Meta Platforms and GP Investments 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and GP Investments.
Diversification Opportunities for Meta Platforms and GP Investments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and GPIV33 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Meta Platforms i.e., Meta Platforms and GP Investments go up and down completely randomly.
Pair Corralation between Meta Platforms and GP Investments
Assuming the 90 days trading horizon Meta Platforms is expected to generate 0.96 times more return on investment than GP Investments. However, Meta Platforms is 1.04 times less risky than GP Investments. It trades about 0.11 of its potential returns per unit of risk. GP Investments is currently generating about -0.07 per unit of risk. If you would invest 11,726 in Meta Platforms on September 1, 2024 and sell it today you would earn a total of 520.00 from holding Meta Platforms or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. GP Investments
Performance |
| Timeline |
| Meta Platforms |
| GP Investments |
Meta Platforms and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and GP Investments
The main advantage of trading using opposite Meta Platforms and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| Meta Platforms vs. GP Investments | Meta Platforms vs. Waste Management | Meta Platforms vs. Global X Funds | Meta Platforms vs. Warner Music Group |
| GP Investments vs. Banco BTG Pactual | GP Investments vs. Banco BTG Pactual | GP Investments vs. Bradespar SA | GP Investments vs. Hsi Malls Fundo |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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