Correlation Between Meta Platforms and EchoStar
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and EchoStar 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 EchoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and EchoStar, you can compare the effects of market volatilities on Meta Platforms and EchoStar 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 EchoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and EchoStar.
Diversification Opportunities for Meta Platforms and EchoStar
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and EchoStar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar 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 EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Meta Platforms i.e., Meta Platforms and EchoStar go up and down completely randomly.
Pair Corralation between Meta Platforms and EchoStar
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the EchoStar. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 1.02 times less risky than EchoStar. The stock trades about -0.13 of its potential returns per unit of risk. The EchoStar is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,194 in EchoStar on January 26, 2024 and sell it today you would lose (606.00) from holding EchoStar or give up 27.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 7.27% |
| Values | Daily Returns |
Meta Platforms vs. EchoStar
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EchoStar |
Meta Platforms and EchoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and EchoStar
The main advantage of trading using opposite Meta Platforms and EchoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, EchoStar 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 EchoStar will offset losses from the drop in EchoStar'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 |
| EchoStar vs. Aviat Networks | EchoStar vs. Silicom | EchoStar vs. Akoustis Technologies | EchoStar vs. Gilat Satellite Networks |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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