Correlation Between Meta Platforms and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Baytex Energy 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 Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms CDR and Baytex Energy Corp, you can compare the effects of market volatilities on Meta Platforms and Baytex Energy 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 Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Baytex Energy.
Diversification Opportunities for Meta Platforms and Baytex Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and Baytex is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp 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 CDR are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Meta Platforms i.e., Meta Platforms and Baytex Energy go up and down completely randomly.
Pair Corralation between Meta Platforms and Baytex Energy
Assuming the 90 days trading horizon Meta Platforms CDR is expected to generate 0.67 times more return on investment than Baytex Energy. However, Meta Platforms CDR is 1.49 times less risky than Baytex Energy. It trades about 0.49 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.25 per unit of risk. If you would invest 3,383 in Meta Platforms CDR on November 9, 2024 and sell it today you would earn a total of 555.00 from holding Meta Platforms CDR or generate 16.41% 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 CDR vs. Baytex Energy Corp
Performance |
| Timeline |
| Meta Platforms CDR |
| Baytex Energy Corp |
Meta Platforms and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Baytex Energy
The main advantage of trading using opposite Meta Platforms and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Meta Platforms vs. Maple Peak Investments | Meta Platforms vs. Farstarcap Investment Corp | Meta Platforms vs. Information Services | Meta Platforms vs. MTY Food Group |
| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus Energy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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