Correlation Between Meta Platforms and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and OceanaGold 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 OceanaGold 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 OceanaGold, you can compare the effects of market volatilities on Meta Platforms and OceanaGold 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 OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and OceanaGold.
Diversification Opportunities for Meta Platforms and OceanaGold
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and OceanaGold is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Meta Platforms i.e., Meta Platforms and OceanaGold go up and down completely randomly.
Pair Corralation between Meta Platforms and OceanaGold
Assuming the 90 days trading horizon Meta Platforms CDR is expected to under-perform the OceanaGold. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms CDR is 1.64 times less risky than OceanaGold. The stock trades about -0.02 of its potential returns per unit of risk. The OceanaGold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 391.00 in OceanaGold on August 29, 2024 and sell it today you would earn a total of 42.00 from holding OceanaGold or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms CDR vs. OceanaGold
Performance |
| Timeline |
| Meta Platforms CDR |
| OceanaGold |
Meta Platforms and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and OceanaGold
The main advantage of trading using opposite Meta Platforms and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Meta Platforms vs. Vizsla Silver Corp | Meta Platforms vs. Upstart Investments | Meta Platforms vs. Perseus Mining | Meta Platforms vs. Metalero Mining Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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