Correlation Between FLOW TRADERS and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and Meta Platforms 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 FLOW TRADERS and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Meta Platforms, you can compare the effects of market volatilities on FLOW TRADERS and Meta Platforms 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 FLOW TRADERS with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Meta Platforms.
Diversification Opportunities for FLOW TRADERS and Meta Platforms
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FLOW and Meta is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and Meta Platforms go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Meta Platforms
Assuming the 90 days horizon FLOW TRADERS is expected to generate 8.28 times less return on investment than Meta Platforms. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.11 times less risky than Meta Platforms. It trades about 0.02 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 51,940 in Meta Platforms on September 1, 2024 and sell it today you would earn a total of 2,420 from holding Meta Platforms or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Meta Platforms
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Meta Platforms |
FLOW TRADERS and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Meta Platforms
The main advantage of trading using opposite FLOW TRADERS and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, Meta Platforms 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 Platforms will offset losses from the drop in Meta Platforms' long position.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
| Meta Platforms vs. NISSIN FOODS HLDGS | Meta Platforms vs. PREMIER FOODS | Meta Platforms vs. SOFI TECHNOLOGIES | Meta Platforms vs. ORMAT TECHNOLOGIES |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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