Correlation Between Meta Platforms and Locafy
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Locafy 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 Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Locafy Limited, you can compare the effects of market volatilities on Meta Platforms and Locafy 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 Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Locafy.
Diversification Opportunities for Meta Platforms and Locafy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and Locafy is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Locafy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy Limited 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 Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy Limited has no effect on the direction of Meta Platforms i.e., Meta Platforms and Locafy go up and down completely randomly.
Pair Corralation between Meta Platforms and Locafy
Given the investment horizon of 90 days Meta Platforms is expected to generate 107.53 times less return on investment than Locafy. But when comparing it to its historical volatility, Meta Platforms is 79.09 times less risky than Locafy. It trades about 0.12 of its potential returns per unit of risk. Locafy Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 522.00 in Locafy Limited on September 12, 2024 and sell it today you would earn a total of 618.00 from holding Locafy Limited or generate 118.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 51.36% |
| Values | Daily Returns |
Meta Platforms vs. Locafy Limited
Performance |
| Timeline |
| Meta Platforms |
| Locafy Limited |
Meta Platforms and Locafy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Locafy
The main advantage of trading using opposite Meta Platforms and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy'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 |
| Locafy vs. Twilio Inc | Locafy vs. Meta Platforms | Locafy vs. Alphabet Inc Class C | Locafy vs. Alphabet Inc Class A |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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