Correlation Between Meta Platforms and Fletcher Building
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Fletcher Building 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 Fletcher Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Fletcher Building Ltd, you can compare the effects of market volatilities on Meta Platforms and Fletcher Building 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 Fletcher Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Fletcher Building.
Diversification Opportunities for Meta Platforms and Fletcher Building
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and Fletcher is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Fletcher Building Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fletcher Building 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 Fletcher Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fletcher Building has no effect on the direction of Meta Platforms i.e., Meta Platforms and Fletcher Building go up and down completely randomly.
Pair Corralation between Meta Platforms and Fletcher Building
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.61 times more return on investment than Fletcher Building. However, Meta Platforms is 1.63 times less risky than Fletcher Building. It trades about 0.17 of its potential returns per unit of risk. Fletcher Building Ltd is currently generating about -0.02 per unit of risk. If you would invest 56,068 in Meta Platforms on September 4, 2024 and sell it today you would earn a total of 3,215 from holding Meta Platforms or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Fletcher Building Ltd
Performance |
| Timeline |
| Meta Platforms |
| Fletcher Building |
Meta Platforms and Fletcher Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Fletcher Building
The main advantage of trading using opposite Meta Platforms and Fletcher Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Fletcher Building 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 Fletcher Building will offset losses from the drop in Fletcher Building's long position.| Meta Platforms vs. Asset Entities Class | Meta Platforms vs. Shutterstock | Meta Platforms vs. Match Group | Meta Platforms vs. Snap Inc |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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