Correlation Between Meta Platforms and Bancroft Fund
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Bancroft Fund 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 Bancroft Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Bancroft Fund, you can compare the effects of market volatilities on Meta Platforms and Bancroft Fund 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 Bancroft Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Bancroft Fund.
Diversification Opportunities for Meta Platforms and Bancroft Fund
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meta and Bancroft is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Bancroft Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancroft Fund 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 Bancroft Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancroft Fund has no effect on the direction of Meta Platforms i.e., Meta Platforms and Bancroft Fund go up and down completely randomly.
Pair Corralation between Meta Platforms and Bancroft Fund
Given the investment horizon of 90 days Meta Platforms is expected to generate 2.79 times more return on investment than Bancroft Fund. However, Meta Platforms is 2.79 times more volatile than Bancroft Fund. It trades about 0.11 of its potential returns per unit of risk. Bancroft Fund is currently generating about 0.04 per unit of risk. If you would invest 26,415 in Meta Platforms on September 1, 2024 and sell it today you would earn a total of 31,017 from holding Meta Platforms or generate 117.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Bancroft Fund
Performance |
| Timeline |
| Meta Platforms |
| Bancroft Fund |
Meta Platforms and Bancroft Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Bancroft Fund
The main advantage of trading using opposite Meta Platforms and Bancroft Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Bancroft Fund 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 Bancroft Fund will offset losses from the drop in Bancroft Fund's long position.| Meta Platforms vs. MediaAlpha | Meta Platforms vs. Asset Entities Class | Meta Platforms vs. Yelp Inc | Meta Platforms vs. Shutterstock |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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