Correlation Between Meta Platforms and Home BancShares
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Home BancShares 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 Home BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Home BancShares, you can compare the effects of market volatilities on Meta Platforms and Home BancShares 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 Home BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Home BancShares.
Diversification Opportunities for Meta Platforms and Home BancShares
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meta and Home is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Home BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home BancShares 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 Home BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home BancShares has no effect on the direction of Meta Platforms i.e., Meta Platforms and Home BancShares go up and down completely randomly.
Pair Corralation between Meta Platforms and Home BancShares
If you would invest 2,157 in Home BancShares on January 25, 2024 and sell it today you would earn a total of 312.00 from holding Home BancShares or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.44% |
| Values | Daily Returns |
Meta Platforms vs. Home BancShares
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home BancShares |
Meta Platforms and Home BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Home BancShares
The main advantage of trading using opposite Meta Platforms and Home BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Home BancShares 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 Home BancShares will offset losses from the drop in Home BancShares' long position.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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