Correlation Between Meta Platforms and Applied Blockchain
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Applied Blockchain 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 Applied Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Applied Blockchain, you can compare the effects of market volatilities on Meta Platforms and Applied Blockchain 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 Applied Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Applied Blockchain.
Diversification Opportunities for Meta Platforms and Applied Blockchain
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and Applied is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain 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 Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of Meta Platforms i.e., Meta Platforms and Applied Blockchain go up and down completely randomly.
Pair Corralation between Meta Platforms and Applied Blockchain
Given the investment horizon of 90 days Meta Platforms is expected to under-perform the Applied Blockchain. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 4.3 times less risky than Applied Blockchain. The stock trades about -0.1 of its potential returns per unit of risk. The Applied Blockchain is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 736.00 in Applied Blockchain on August 31, 2024 and sell it today you would earn a total of 230.00 from holding Applied Blockchain or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Applied Blockchain
Performance |
| Timeline |
| Meta Platforms |
| Applied Blockchain |
Meta Platforms and Applied Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Applied Blockchain
The main advantage of trading using opposite Meta Platforms and Applied Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Applied Blockchain 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 Applied Blockchain will offset losses from the drop in Applied Blockchain'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 |
| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |