Correlation Between Meta Platforms and CurrentC Power
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and CurrentC Power 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 CurrentC Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and CurrentC Power, you can compare the effects of market volatilities on Meta Platforms and CurrentC Power 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 CurrentC Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and CurrentC Power.
Diversification Opportunities for Meta Platforms and CurrentC Power
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and CurrentC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and CurrentC Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CurrentC Power 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 CurrentC Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CurrentC Power has no effect on the direction of Meta Platforms i.e., Meta Platforms and CurrentC Power go up and down completely randomly.
Pair Corralation between Meta Platforms and CurrentC Power
Given the investment horizon of 90 days Meta Platforms is expected to under-perform the CurrentC Power. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 16.01 times less risky than CurrentC Power. The stock trades about -0.1 of its potential returns per unit of risk. The CurrentC Power is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 12.00 in CurrentC Power on August 30, 2024 and sell it today you would earn a total of 11.00 from holding CurrentC Power or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Meta Platforms vs. CurrentC Power
Performance |
| Timeline |
| Meta Platforms |
| CurrentC Power |
Meta Platforms and CurrentC Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and CurrentC Power
The main advantage of trading using opposite Meta Platforms and CurrentC Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, CurrentC Power 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 CurrentC Power will offset losses from the drop in CurrentC Power's long position.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| CurrentC Power vs. Apple Inc | CurrentC Power vs. Microsoft | CurrentC Power vs. Alphabet Inc Class C | CurrentC Power vs. Meta Platforms |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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