Correlation Between Meta Platforms and Amana Developing
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Amana Developing 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 Amana Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Amana Developing World, you can compare the effects of market volatilities on Meta Platforms and Amana Developing 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 Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Amana Developing.
Diversification Opportunities for Meta Platforms and Amana Developing
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and Amana is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World 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 Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of Meta Platforms i.e., Meta Platforms and Amana Developing go up and down completely randomly.
Pair Corralation between Meta Platforms and Amana Developing
Allowing for the 90-day total investment horizon Meta Platforms is expected to generate 6.06 times more return on investment than Amana Developing. However, Meta Platforms is 6.06 times more volatile than Amana Developing World. It trades about 0.01 of its potential returns per unit of risk. Amana Developing World is currently generating about 0.03 per unit of risk. If you would invest 17,495 in Meta Platforms on January 17, 2024 and sell it today you would lose (546.00) from holding Meta Platforms or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.69% |
| Values | Daily Returns |
Meta Platforms vs. Amana Developing World
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Amana Developing World |
Meta Platforms and Amana Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Amana Developing
The main advantage of trading using opposite Meta Platforms and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
| Amana Developing vs. Amana Income Fund | Amana Developing vs. Amana Growth Fund | Amana Developing vs. Amana Participation Fund | Amana Developing vs. Azzad Ethical Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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