Correlation Between Meta Platforms and Elah Holdings
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Elah Holdings 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 Elah Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Elah Holdings, you can compare the effects of market volatilities on Meta Platforms and Elah Holdings 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 Elah Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Elah Holdings.
Diversification Opportunities for Meta Platforms and Elah Holdings
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meta and Elah is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Elah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elah Holdings 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 Elah Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elah Holdings has no effect on the direction of Meta Platforms i.e., Meta Platforms and Elah Holdings go up and down completely randomly.
Pair Corralation between Meta Platforms and Elah Holdings
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.16 times more return on investment than Elah Holdings. However, Meta Platforms is 6.38 times less risky than Elah Holdings. It trades about 0.38 of its potential returns per unit of risk. Elah Holdings is currently generating about 0.0 per unit of risk. If you would invest 55,408 in Meta Platforms on September 16, 2024 and sell it today you would earn a total of 6,627 from holding Meta Platforms or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Elah Holdings
Performance |
| Timeline |
| Meta Platforms |
| Elah Holdings |
Meta Platforms and Elah Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Elah Holdings
The main advantage of trading using opposite Meta Platforms and Elah Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Elah Holdings 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 Elah Holdings will offset losses from the drop in Elah Holdings' long position.| Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc | Meta Platforms vs. Tencent Holdings Ltd |
| Elah Holdings vs. Advantage Solutions | Elah Holdings vs. Atlas Corp | Elah Holdings vs. PureCycle Technologies | Elah Holdings vs. WM Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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