Correlation Between NYSE Composite and Meta Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Meta Financial 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 NYSE Composite and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Meta Financial Group, you can compare the effects of market volatilities on NYSE Composite and Meta Financial 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 NYSE Composite with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Meta Financial.
Diversification Opportunities for NYSE Composite and Meta Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Meta is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group and NYSE Composite 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 NYSE Composite are associated (or correlated) with Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Meta Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and Meta Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.46 times less return on investment than Meta Financial. But when comparing it to its historical volatility, NYSE Composite is 4.51 times less risky than Meta Financial. It trades about 0.29 of its potential returns per unit of risk. Meta Financial Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7,114 in Meta Financial Group on August 31, 2024 and sell it today you would earn a total of 1,332 from holding Meta Financial Group or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Meta Financial Group
Performance |
| Timeline |
NYSE Composite and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Meta Financial Group
Pair trading matchups for Meta Financial
Pair Trading with NYSE Composite and Meta Financial
The main advantage of trading using opposite NYSE Composite and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Meta Financial 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 Meta Financial will offset losses from the drop in Meta Financial's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Meta Financial vs. Capitol Federal Financial | Meta Financial vs. Colony Bankcorp | Meta Financial vs. First Mid Illinois | Meta Financial vs. Meridian Bank |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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